In a recent case in Tennessee, homeowners suffered a fire loss and filed a claim with their insurance company, Anpac.1 The insurance company investigated the loss and found that the homeowners intentionally set the fire and denied coverage. It then filed a declaratory judgment action. The homeowners filed counterclaims for breach of contract, unfair claims practices and bad faith. They alleged that the insurance company ignored evidence that showed they did not set the fire. In Tennessee, a statute allows insureds to seek a penalty of up to 25% of the total liability where a claim is denied in bad faith.2 When an insurance company refuses to pay a claim within 60 days of a demand, it must pay an additional 25% if the refusal was not in good faith and caused the insureds additional damages.

Continue Reading Litigation Does Not End the Continuing Duty of Good Faith

Many of you are likely aware of the Florida Supreme Court decision holding a cause of action for good faith and fair dealing is not recognized in Florida.1 Despite the Chalfonte decision, good faith and fair dealing came up a fair bit in a recently settled case I litigated for approximately two years. In that case, the carrier sued the policyholder, claiming, among other things, coverage was not owed due to the policyholder’s purported lack of cooperation. The court properly kept my good faith and fair dealing affirmative defense at play, despite Chalfonte.

Continue Reading Is Good Faith and Fair Dealing Still Alive in Florida, Defensively Speaking?

I will be focusing my next month of blogging on how to prove and win a first-party bad faith case in Colorado. In proving a bad faith case, the first source I look to is the Colorado Revised Statutes, specifically, C.R.S. §§10-3-1113 (Trier of Fact in Civil Actions) and 10-3-1104 (Unfair Methods of Competition–Unfair or Deceptive Acts or Practices).

Continue Reading Proving and Winning a First-Party Bad Faith Case in Colorado

Most policyholder advocates have made it up to New Jersey or another jurisdiction affected by Superstorm Sandy over the last year. Recently, I was in Atlantic City fighting over coverage for one of my clients whose carrier truly missed the boat. The purpose of the visit was to allow the carrier the opportunity to have its engineers inspect the property, something the carrier should have done months ago when my clients’s public adjuster provided an estimate that exceeded the carrier’s payment. My consultants and I sat quietly during the first hour of the inspection. As the carrier’s consultants began to leave the 4,500 square foot building, I asked a few simple questions.

Continue Reading What Ever Happened to the Insurance Company’s Duty to Investigate a Claim?

Insurance companies cannot escape bad faith liability by asserting the “Advice Of Counsel” defense. Although the defense exists, it is not an affirmative defense, and is not a complete defense to bad faith.

Continue Reading But Our Lawyers Told Us To Do It! — Insurer’s Duty of Good Faith Cannot Be Delegated To Third Parties, Part II

Several weeks ago, I analyzed the Defense Bar’s latest attempt to increase the costs of litigation for policyholders. In my December 13, 2012, post, Winning a Discovery Battle in Bad Faith and C.R.S. 10-3-1115 Cases Against Insurers, I noted the Colorado Defense Bar’s latest litigation tactic—attempting to designate nonparties at fault and apportioning damages resulting from the insurer’s bad faith onto other nonparties such as vendors, contractors, or public adjusters.

Continue Reading Insurer’s Duty of Good Faith Cannot Be Delegated To Third Parties

Many policyholders were unable to get through to their insurers in the wake of Super-Storm Sandy, while others’ claims have been denied by insurers that never even sent a representative to the damaged property. Is it unreasonable for insurers to handle claims in that fashion, and does your property insurer owe you a duty of good faith in processing your Super-Storm Sandy claim? What are the consequences for an insurer’s unfulfilled promises?

Continue Reading Does Your Property Insurer Owe You A Duty Of Good Faith In Processing Your Super-Storm Sandy Claim?

The history and development of the Duty of Good Faith and Fair Dealing insurers owe to its own insured has evolved in California since the beginning of the 1970s. Generally, with every contract, the obligations of good faith and fair dealing are not delineated in the contract itself, but are "…imposed by law governing the manner in which the contractual obligations must be discharged-fairly in good faith."1

Continue Reading Duty of Good Faith and Fair Dealing requires an Insurer to Act Affirmatively

Following the Ninth Circuit Court of Appeal’s recent decision in Du v. Allstate Insurance Company,1 California insurers are going to have to become much more proactive in handling claims. In short, the Court held that an insurer has a duty to effectuate settlement where liability is reasonably clear, even in the absence of a settlement demand.

Continue Reading The Insurer’s Duty to Settle: Yan Fang Du v. Allstate Insurance Company