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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
May 19, 2015

Insurer Found to Be Reasonable in Disclaiming Coverage Even Though Illinois Appeals Court Found Coverage for UIM Benefits

Summary: Automobile insurer brought a declaratory judgment action against insureds and automobile rental company seeking to disclaim liability for underinsured motorist (UIM) benefits arising out of a collision between the insureds’ vehicle and a rental vehicle. Insureds filed counterclaims for breach of insurance policy and vexatious refusal to pay and the rental company filed counterclaims including request for declaration that it did not provide liability insurance arising out of the collision. After partial summary judgment was granted to the insurer by the trial court, the insureds appealed. The appellate court held the insureds were not required to exhaust the minimum financial responsibility amounts required to be provided by rental companies before they could collect UIM benefits and the insurer’s conduct was not vexatious and unreasonable.

Bad Faith Blog
August 9, 2013

Pro Se Bankruptcy Filings Lead to Breach of Contract and Vexatious Penalties, Rather Than Misrepresentation Defense

The Merseals had a fire loss and made a personal property claim for $150,000. A few years earlier they filed bankruptcy and prepared bankruptcy schedules valuing their personal property at $600. The jury’s verdict was for the Merseals awarding $134,000 on the policy, vexatious penalties of $13,586, and attorney’s fees of $67,000. Those rulings were affirmed on appeal.

Bad Faith Blog
March 7, 2011

Court Takes Insurer’s Side When Coverage Defense is Bona Fide

West Bend Mut. Ins. v. Norton, 940 N.E.2d 1176 (Ill. App. 3 Dist. 2010) An Illinois Appellate Court recently upheld summary judgment in favor of an insurer on the insured’s vexatious refusal to settle claim. The insured driver, Wanda Norton, was involved in a vehicle collision with Karyn Patterson. Norton was insured by West Bend and Patterson was insured by American Family. Norton hired counsel and filed suit against Patterson. Norton’s counsel sent a demand letter to American Family to settle for approximately $18,000. In response, American Family offered to settle Norton’s claim for $7,800. Norton rejected the settlement offer and filed suit.