I hate when insurers are accused of acting in “bad faith.” Most people who say that have no idea what they are saying or writing. They are just upset with the results of an insurer investigation. It is the failure to act in the utmost of good faith and fair dealing which historically subjects an insurer to extra-contractual damages. It does not mean that the insurer was “evil” or “bad.” The law did a disservice to consumers when it called these actions “bad faith” causes of action.
Insurance companies often complain when policyholders sue the independent adjustment firm for causing delay and failure to act in good faith. In an interesting twist to this topic, AmGuard Insurance Company sued its own engineering firm that allegedly acted in bad faith.
Our firm is battling State Auto in a commercial first-party property insurance claim in Arizona. As a result, we have been researching deeply into the nuances of Arizona bad faith law in preparation for the upcoming trial. I thought we should give an update on the basics of Arizona first-party common law bad faith.
Continue Reading Arizona First-Party Common Law Bad Faith
Contents claims are often overlooked. Some insurance companies, like FedNat, fail to adjust contents claims and only estimate and adjust real property insurance claims until their customer does the good faith work of investigation and evaluation for them.
Continue Reading Contents Claims Are Important and FedNat Does Not Adjust Contents Claims
A recent Georgia case1 is an example of a loss that should never have been made into a “bad faith” lawsuit. The policyholder only received an additional $3,512.10 in damages over what the insurance company paid before the lawsuit was filed. In yesterday’s post, Good Faith (WKA Bad Faith) Lawsuits Do Not Always Result in a Policyholder Trial Victory, I noted a number of factors that tend to indicate a good claim practice lawsuit. I also stated:
Continue Reading A Follow Up To Good Faith (WKA Bad Faith) Lawsuits Do Not Always Result in a Policyholder Trial Victory
I can imagine some readers are wondering why I did not simply title this post with the words “Bad Faith” rather than “Good Faith.” The reason is that an insurance company owes a duty for “good faith” conduct. It simply is wrong that we refer to these improper claims practice lawsuits as “bad” when the cause of action is for the breach of the duty to act in “good” faith. I noted this in, Insurance Companies Must Perform in Good Faith Regardless of Their Customer’s Imperfect Actions:
It is unfortunate that we call these cases ‘bad faith’ cases when they are really ‘lack of good faith’ cases. Just read the ethical rules that historically called for insurance companies and their employees to act in the ‘utmost of good faith and fair dealing’ with their customers.
A recent post, Louisiana Policyholders Deserve Good Faith Claims Treatment—Understanding Louisiana Hurricane Claim Bad Faith Law, discussed fundamental Louisiana law requiring insurance companies to treat policyholders in good faith and properly interpret their insurance policies. What happens if insurance companies delay claims following the recent hurricanes in Louisiana?
Continue Reading Understanding Louisiana Bad Faith Law When Claims Payments Are Delayed or Paid Too Late
The previously secret Insurance Services Office (ISO) documents I mentioned in yesterday’s afternoon post, ISO Internal Documents Are Important Regarding COVID Litigation, show a few of the internal actions and analysis of coverage and what to do about a coronavirus pandemic event leading up to the Virus Exclusion Endorsement. These were never provided to the public when the pandemic struck last year, and people were asking about lost business income insurance coverage. Instead, the ISO, its executives, policy experts, and member insurance companies—including their attorneys making arguments preventing this disclosure—have had access to these previously secret documents. Importantly, they were not provided so that judges deciding these cases could consider them and determine if they were relevant and significant to their decisions.
Continue Reading How the Secret Internal ISO Documents Can Be Used to Demonstrate Coverage for Business Interruption Cases
As roadways are cleared of trees and debris and the downed power lines removed, residents begin returning to an unrecognizable community, their home, all landmarks destroyed in the heavily impacted areas. It is like a dream as they begin to navigate lost and in shock. Then, there it is: a remnant of what used to be a home, a business, a school, a store, the townhall—all destroyed. But resolve settles in with determination: “We have insurance. We’ll just rebuild.” And, it begins.
Continue Reading Duty of Good Faith and Fair Dealing After Hurricane Laura – What Now and How Long?
The United States District Court for the District of Minnesota in Selective Insurance Company of South Carolina v. Sela,1 recently addressed whether the implied covenant of good faith includes a broader obligation to act “reasonably” and “properly” in making a decision about whether to pay benefits. Sela had submitted a claim for hail damage to his home. Selective investigated the claim and filed suit alleging that Sela made fraudulent misrepresentations and was not entitled to coverage. Sela counterclaimed for breach of contract, breach of the implied covenant of good faith and fair dealing, and bad faith, pursuant to Minn. Stat. §604.18.
Continue Reading Does the Implied Covenant of Good Faith and Fair Dealing Impose a Broad Duty on Insurers to Act “Reasonably” or “Properly” in Handling Claims?