As a policyholder lawyer, much of my practice over the past 10 years has been in Illinois and the Midwest. Accordingly, I would like to give an introduction into Illinois “bad faith.” I put that term in quotations because Illinois does not have a traditional “bad faith” law. Rather, Illinois law provides an extracontractual remedy to policyholders when an insurer’s action in handling a claim is vexatious and unreasonable. 215 ILCS 5/155 (West 2010). This extracontractual remedy, commonly referred to as “Section 155,” provides for the recovery of taxable costs, reasonable attorneys’ fees, other costs, plus an amount not to exceed one of the following:

  1. 60% of the amount which the court or jury finds such party is entitled to recover against the insurance company, exclusive of costs;
  2. $60,000;
  3. the excess of the amount which the court or jury finds such a party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action.

Continue Reading Fighting for Insurers’ Claims Manuals, Guidelines and Procedures

On May 5th, I blogged about an important case pending before the California Supreme Court—Nickerson v. Stonebridge Life Insurance Company—that was set to address an important issue for policyholders forced to sue their insurers for bad faith and punitive damages. You can check out my prior blog addressing the issues in the case here.

Continue Reading California Supreme Court Decides That Policyholder Attorney’s Fees Are Included to Calculate Punitive Damages

The California Supreme Court heard oral argument recently on an issue that is important to insurance policyholders forced to sue their insurers for bad faith and punitive damages: Whether an award of attorney fees should be included as compensatory damages for purposes of calculating the ratio between punitive and compensatory damages. The case is Nickerson v. Stonebridge Life Insurance Company.1

Continue Reading California to Decide Whether Policyholder Attorney Fees Are Included to Calculate Punitive Damages

Insurance is a heavily regulated industry and everyone who reads our daily blog knows that insurance rules and regulations vary by state and fall under each individual state’s jurisdiction. Hawai’i is no different and in a state whose insurance laws are still evolving, it is interesting to see that when it comes to appraisal in the property insurance sector, Hawai’i does not have its own set of rules on appraisal. Although appraisal is definitely not an arbitration process, in Hawai’i, the rules of arbitration apply.

Continue Reading Insurance Appraisal takes on the rules of Arbitration but Preserves Bad Faith in Hawai’i

In California, when it comes to insurance bad faith litigation we usually think of first party bad faith where an insurer owes a duty to its own insured. In fact, third party bad faith is barely recognized except where the third party insurer refuses to accept reasonable settlements within liability policy limits. What this means is where a demand was made of a third party insurer (in instances like car collisions or falling trees from a neighbor’s yard) the insurer does not have the same duty to the person issuing the demand as it would to its own insured. In rare instances if a reasonable demand for policy limits is made to a third party insurer, the insurer may open up liability to its own insured above and beyond policy limits if it does not accept a policy limits demand within a reasonable time period if it knows the damage for the third party is above policy limits.

Continue Reading Is California Law Bad Faith Law Changing Due to Jury Instructions?

Initially introduced in January 2014, Assembly Bill No. 231 made its way before New Jersey lawmakers during a committee hearing on December 10, 2015. The bill, "establishes a private cause of action for insureds or their assignees regarding unfair practices in the settlement or attempted settlement of insurance claims arising out of a declared disaster."

Continue Reading New Jersey Legislature Considers a Bad Faith Statute for Catastrophe Claims

After Hurricane Ike some Texas courts decided that if a claim went to appraisal and the carrier paid the award, then no matter how nasty the carrier had been in handling the claim up to the time of appraisal, the policyholder lost the right to pursue a cause of action for breach of contract (and attorney fees).1

Continue Reading Graber Is Not an Outlier: Appraisal Should Not Wash Away Carrier’s Claims Handling Sins

As a property insurance attorney I am often asked whether bad faith damages are recoverable in California. Over the course of many years, California case law has changed and the recovery of bad faith damages, versus attorney fees and punitive damages, has evolved. Bad faith damages are tort damages while punitive damages are recoverable only upon the finding of bad faith and that the conduct of the insurer was malicious, oppressive or fraudulent.

Continue Reading California Bad Faith Revisited

There is a new case out of Pennsylvania where the insurance company took over a year to investigate and finally denied the claim but the court found there was no bad faith. Reported cases are great to read and provide an education how courts are ruling on various subjects, but always remember that the facts of each case are different. Use the cases as a guide to avoid the pitfalls that other plaintiffs have faced and hold insurance companies responsible for wrongdoings just as prior courts have, but apply the law to your particular set of facts.

Continue Reading Investigation Took Over a Year but Court Finds There Was No Bad Faith