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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 12, 2020

Insurer Twice Failed to Conduct a Reasonable Claim Investigation, Now Liable for $5.4 Million in Bad Faith Damages

The First Circuit Court of Appeals recently upheld a $5.4 million award against a nightclub’s insurer after it found the insurer engaged in unfair claim settlement practices by failing to conduct a reasonable investigation into claims by a 20-year old dancer who was seriously injured in a car accident after the nightclub allowed the dancer to drive away heavily intoxicated. The dancer, who was known to be underage, was an independent contractor at a nightclub in Worcester, Massachusetts. On the night in question, the dancer drank heavily while working at the nightclub, and after her shift ended, was escorted to her car by the nightclub’s bouncer, who knew the dancer was intoxicated but nonetheless let her drive away. Shortly after leaving the nightclub, the dancer was involved in a two-car collision, resulting in significant injuries, disfigurement, and more than $375,000 in medical expenses. The nightclub’s insurer referred the matter to a third-party adjuster and instructed it to perform a “limited investigation.” The insurer concluded the investigation before the third-party adjuster discovered the nightclub’s policy requiring dancers to encourage patrons to buy them drinks.

Bad Faith Blog
August 20, 2015

Insured’s Material Misrepresentations/Concealments Sink Maritime Insurance Coverage

Summary: Markel American Insurance Company filed a declaratory judgment action alleging the maritime insurance policy it issued to Veras should be declared void ab initio. The District Judge agreed with the Magistrate Judge’s recommendations that the doctrine of uberrima fides governs this case, that Veras’ misrepresentations and concealments violated his duty of utmost good faith, and that the District Judge should grant Markel’s motion for summary judgment. With those recommendations from the Magistrate Judge and no objection from Veras, the court declared the maritime policy void ab initio.