Bad Faith Blog

Summary: State Farm issued an uninsured motorist policy to Enrique with a $100,000 limit. Enrique was injured in an auto accident, sought UM benefits and also sought to recover bad faith damages. The bad faith portion of the case was stayed pending resolution of the UM claim which resulted in a jury verdict awarding $260,000. However, the trial court granted summary judgment in favor of State Farm on the bad faith claim which a divided Delaware Supreme Court affirmed.

Summary: Thomas and Allison Missler’s home was destroyed in a fire on June 1, 2011. While the fire department was responding to the fire, the Misslers’ State Farm insurance agent, Theresa Chapman, arrived at the scene. The Misslers had purchased a homeowners insurance policy from State Farm which provided dwelling coverage, personal property coverage and coverage for additional living expenses. After arriving, Chapman contacted Indiana Restoration & Cleaning Services (“IRCS”), a State Farm preferred vendor. The Misslers became dissatisfied with IRCS and State Farm. They then filed suit against both and appealed after State Farm prevailed on its motion for summary judgment. State Farm prevailed on appeal.

Summary: The insured filed suit against his insurer for breach of contract and bad faith after repeatedly failing to attend an independent medical examination (“IME”) scheduled by his insurer. On appeal, the Third Circuit held the insured materially breached the insurance contract by failing to appear for the IME. The court further held the insurer had a reasonable basis for the IME and its subsequent denial of the claim. Because there was a reasonable basis for its actions, the insurer did not commit bad faith.