Bad Faith Blog

James Demetre carried liability insurance on his vacant lot, which was previously a gas station. Demetre was notified that a family occupying a nearby residence was bringing environmental claims against him stemming from the alleged migration of petroleum from his property. Indiana Insurance Company provided a defense under a reservation of rights, sought declaratory judgment on its coverage dispute, and ultimately indemnified Demetre in relation to the final settlement. Nevertheless, Demetre sued Indiana Insurance for bad faith breach of his insurance contract. These claims went to trial and Demetre was awarded $925,000 in emotional distress damages and $2.5 million in punitive damages. The resultant question is: how is such a result possible?

Summary: American Modern insured James and Ruth Roller when Mr. Roller set fire to the garage in a failed suicide attempt. American Modern investigated the loss, denied their claim, and then the Rollers filed a declaratory judgment action. The trial court denied coverage which the appellate court affirmed on all grounds.

Summary: A homeowner’s insurer brought an action against the insured for declaratory judgment that liability coverage was barred by an exclusion for bodily injury resulting from use of a “jet ski.” The insured counterclaimed alleging bad faith. The trial court found for the insurer on the bad faith claim after a first appeal found coverage was owed. The court held on the appeal of the bad faith ruling that the meaning of “jet ski” was ambiguous and fairly debatable, barring the bad faith action.

Summary: Landy Insurance Agency is a broker selling insurance to real estate professionals. Landy purchased a professional liability insurance policy from Utica Mutual Insurance Company.

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.