Bad Faith Blog

An insured motorist who sustained injuries in a motor vehicle accident brought a first party bad faith action alleging the automobile insurer acted in bad faith in attempting to settle the claim for underinsured motorist (UIM) benefits. The district court granted summary judgment for the insurer; however, the Eleventh Circuit held that although actions of the insured or the insured’s lawyer were part of the “totality of circumstances” to be considered in bad faith claims, there were factual issues that still existed precluding summary judgment.

On April 26, 2017, the Missouri General Assembly passed a bill modifying certain statutory provisions relating to settlement of tort claims. The bill, known as HB 339 and HB 714, grants certain rights to insurers when a claimant and tortfeasor enter into a contract to limit recovery pursuant to R.S.Mo. § 537.065 and imposes new requirements on time-limited demands in R.S.Mo. § 537.058. Governor Greitens signed the bill on July 5, 2017 and it will be effective August 28, 2017. This legislation is designed to limit currently legal, but abusive, practices against insurers in an effort to reform insurance “bad faith” litigation in Missouri.

Summary: A driver lost control of his truck and crashed into a cabin causing property damage, including a heating fuel spill, and personal injuries to the cabin’s owner. The cabin’s owner brought suit against the driver and his insurer alleging in part that the insurer took charge of and negligently handled the fuel spill cleanup. The trial court granted summary judgment in favor of the insurer finding it owed no duty to the cabin’s owner. On appeal, the Alaska Supreme Court found a duty by the insurer was not precluded, and summary judgment was not appropriate.

If a tree falls in the woods, and no one is around to hear it, does it still make a sound? If a claimant offers a settlement, and the insured would have rejected it had she known of the offer, is it bad faith? The Ninth Circuit said no. Rejecting a settlement without contacting the insured is never wise, but if evidence shows the insured would have rejected such an offer, a valid bad faith claim may not exist for lack of injury.

Summary: An employer’s excess insurer brought an action for bad faith against the primary insurer, which had defended the employer against a worker’s personal injury action that resulted in a settlement in excess of the primary insurer’s limits. The excess insurer alleged the primary insurer should have settled the case within the primary carrier’s policy’s limits. The trial court dismissed the claim finding it was not actionable when there was no excess judgment entered against the insured. The Court of Appeals reversed and remanded.