Bad Faith Blog

Summary: The insureds sued their homeowners’ insurer and the defense attorneys hired by the insurer alleging bad faith in handling their claim, legal malpractice, and breach of fiduciary duty. The insurer resolved the bad faith claim by funding a settlement of the underlying third party claim. The Court of Appeals affirmed judgment entered in favor of the defense attorneys after an analysis of the challenging relationship between insurer, defense attorney, and insured. This case serves as a reminder that proper handling of the tri-partite relationship is necessary whenever the insurer has a duty to defend; otherwise, the insurer may face bad faith exposure.

Summary: In August 2012 a fire destroyed thirty-six apartment units owned by Summit Park Apartments, LLC (“Summit Park”). Great Lakes Reinsurance (“Great Lakes”) insured Summit Park and the policy provided for construction costs, loss of business income, and out-of-pocket expenses. The policy also obligated Great Lakes to pay out claims within thirty days.

Summary: Infinity Assurance Insurance Company insured Ben Purscell’s car when he was involved in a serious auto accident leading to a serious injury and a death. His liability limits were only $25,000/$50,000. Infinity was unable to settle the underlying case which resulted in verdicts exceeding $900,000. Purscell filed a bad faith failure to settle and breach of fiduciary duty case against Infinity. The district court judge entered summary judgment for Infinity which was affirmed on appeal.