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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
February 12, 2017

Tri-Partite Relationship Did Not Result in Bad Faith Exposure

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.

Bad Faith Blog
March 23, 2016

No Bad Faith for the Denial of Uncovered Losses

Summary: The insured’s assignee argued Occidental Fire & Casualty Company of North Carolina breached the covenant of good faith and fair dealing by refusing to defend and indemnify the insured against a claim regarding faulty construction of shower walls in a hotel. The District Court for Arizona found because the insurer did not defend the insured in the underlying suit, it could assert new reasons for the denial of coverage. The court ruled the policies did not provide coverage, and there was no bad faith where the policies did not provide coverage.