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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
December 17, 2019

Hawaii Supreme Court: The Insurer’s Good Faith Claim Handling Duty Begins Before the Formal Claim Submission

The Supreme Court of Hawai’i’s recent opinion restated two important points of Hawai’i bad faith law: (1) the insurer’s good faith claim handling duty begins with the first communication with the insured, even before the formal claim submission and (2) the insurer’s compliance with the terms of the insurance contract can be insufficient to avoid bad faith liability. Therefore, in order to defeat a bad faith claim under Hawai’i law, the insurer must at all times act in good faith before and after the claim submission. The court restated this duty when reversing a summary judgment for a health insurer. Although it complied with the terms of the insurance contract following receipt of the formal claim, it arguably misled its insured in discussions prior to the claim.

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Bad Faith Blog
November 26, 2019

Contracting with Commercial Property Loss Adjusters from Other States Can Defeat Federal Diversity Jurisdiction

The insured Grecian Delight Foods had an explosion at its factory which caused it to submit a claim. When Grecian Delight and its insurer could not agree how to resolve the $26.76M claim, Grecian Delight filed suit against its insurer in state court for breach of contract, declaratory judgment, tortious interference, and bad faith.  Grecian Delight additionally brought claims against the company hired to adjust the claim and its CEO for tortious interference with the insurance policy and the insured’s contract with a third-party.  The insurer removed the case arguing that the adjusting company and its CEO were fraudulently joined, but the court disagreed and held that the insurer had not met its burden of establishing that the claims against the adjuster and its CEO “[had] no chance of success.”  For that reason, the case was remanded back to state court.

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Bad Faith Blog
November 5, 2019

Georgia Court of Appeals Reiterates that a Verdict Significantly Exceeding the Policy Limits, Alone, Is Not Bad Faith Conduct

The Georgia Court of Appeals affirmed summary judgment for GEICO and held that there was no evidence of a frivolous and unfounded refusal to pay its insured’s demand for the $25,000.00 limit of her underinsured motorist policy, which was needed to support a bad faith claim brought under Ga. Code Ann. § 33-7-11(j) (failure to pay within sixty days of demand). The court found that GEICO timely and thoroughly investigated the claim upon receipt of the demand letter. A later jury verdict against the underinsured motorist greatly exceeding the $25,000.00 policy limit alone was insufficient to establish that an insurer acted in bad faith.

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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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