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Bad Faith Blog

We cover current issues, highlights and best practices exclusively on claims of bad faith and extra contractual damages.

Bad Faith Blog
June 17, 2019

Colorado Supreme Court Holds Insurers Must Evaluate and Pay Each Separate UM/UIM Component or Risk-Prompt Payment Penalties

The Supreme Court of Colorado, interpreting the state’s prompt-payment statute which provides that an insurer “shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party [insured] claimant,” held that an insurer violated the statute when it withheld payment for undisputed medical expenses on the basis of the presence of separate disputed payments. 

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Bad Faith Blog
May 15, 2019

Colorado Excess Insurance Carrier’s Equitable Subrogation Claim Against Primary Carrier for Refusal to Settle Required Allegations and Proof of Bad Faith

The Colorado Court of Appeals held that an excess carrier asserting an equitable subrogation claim against a primary insurer for a failure to settle a claim within the primary carrier’s liability limits steps into the shoes of the insured, and must plead and prove bad faith to recover against a primary carrier for failing to settle. In the underlying case, a medical malpractice suit was filed against a physician with two separate professional liability policies.

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Bad Faith Blog
March 29, 2019

Insurer Loses Bad Faith Summary Judgment for Ignoring the Opposing Medical Expert’s Opinions

The Washington Court of Appeals held that an insurer’s refusal to consider the causation opinion of its insured’s equally qualified expert could be bad faith conduct. In the underlying case, State Farm’s insured was involved in a car accident where she was rear-ended and suffered neck and back injuries. The rear-ending at fault driver had only a $25,000 liability limit to split between three injured parties. 

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Bad Faith Blog
September 24, 2017

Montana Supreme Court: $300,000 Consent Judgment Proper

Summary: The seller of a home was insured under a Homeowner’s Policy and a Renter’s Policy issued by United Services Automobile Association (USAA). Past basement problems, including flooding, were not disclosed by the seller. The basement flooded after the buyer took possession, and buyer sued the seller. After USAA denied coverage, the parties reached a settlement wherein a consent judgment was entered for $300,000 in favor of Huckins in the underlying case and Huckins then filed suit against USAA for breach of the duty to defend Van Sickle, breach of contract, common law and statutory bad faith, and punitive damages. The District Court held that USAA had not breached its duty to defend, as the claim was not an “occurrence,” and the buyer appealed. The Montana Supreme Court reversed and held USAA had a duty to defend under the renter’s policy.

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Bad Faith Blog
July 16, 2017

No Pay for Delay Today: Insurer’s Joint Check Satisfied Prompt Payment Statute

Summary: Property Gusma Properties owned and insured was damaged in Hurricane Ike. When the insurer demanded an appraisal, Gusma hired an attorney to assist. Following the appraisal award, the insurer tendered a check to the attorney for the full amount, all of which the attorney retained. Gusma sued the attorney and the insurer to recover its losses. Gusma claimed it was entitled to prompt payment penalties from the insurer for issuing the check jointly payable to Gusma and its counsel. The Texas Court of Appeals affirmed the trial court’s ruling that Gusma was not entitled to penalties. The Court of Appeals held, on this issue of first impression, that an insurer does not “delay payment, within the meaning of the Prompt Payment provisions, when it tenders payment to the insured’s authorized counsel in the form of a negotiable instrument that is made jointly payable to both insured and its counsel.”

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