Bad Faith Blog

Summary: Insured’s property was destroyed by fire. Homeowner’s insurer denied claim based on nonrenewal of policy prior to fire loss. Mortgagee institutes foreclosure action against insured, who filed third-party action against insurer for breach of contract, bad faith refusal to pay claim, and indemnity and contribution, claiming attempt to non-renew did not comply with South Carolina law and was invalid. The trial court entered summary judgment for insurer, finding its notice of nonrenewal complied with South Carolina law. Because the nonrenewal was proper, the bad faith refusal to pay claim failed as a matter of law.

Summary: This case came before the federal court for the District of South Carolina upon motions to dismiss filed by Church Insurance Company of Vermont (CIC-VT) and The Church Insurance Company (CIC), and The Episcopal Church in South Carolina’s (TEC-SC) motion for summary judgment. CIC-VT issued an insurance policy (“Policy”) to TEC-SC. The Policy provided commercial liability coverage and other coverage, which specifically provided coverage for “advertising injury liability.” After the underlying action was commenced against TEC-SC, it requested that CIC-VT defend and indemnify it. However, CIC-VT denied coverage on numerous grounds, including that the claims in the underlying action were not covered by the Policy. TEC-SC then filed suit in federal court against CIC-VT and CIC, alleging claims for: (1) breach of contract; (2) insurance bad faith; and (3) declaratory judgment that Defendants have a duty to defend and indemnify TEC-SC in the underlying action.