In Grey Oaks Country Club v. Zurich American Insurance Company, the District Court for the Middle District of Florida examined whether a policyholder could sustain a cause of action for bad faith against an insurer simultaneously with a coverage action. Relying on well-settled Florida case law, the court held that plaintiff’s bad faith claim was premature because a bad faith cause of action does not accrue until there is a determination of both liability and damages in the coverage case. Accordingly, plaintiff’s bad faith count was dismissed without prejudice. Grey Oaks Country Club brought suit against Zurich for damages to
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Archives for Insurance Bad Faith
Third Circuit Authorizes New Jersey Consumer Fraud Act Claim Against Automobile Insurer Regarding Allegedly Fraudulent Procurement of Release
In Alpizar-Fallas v. Favero, the United States Court of Appeals for the Third Circuit examined a putative class action arising from an automobile accident allegedly resulting in injuries. Both the injured party and the other driver were insured by the same company. On the day after the accident, the injured party was contacted by a claims adjuster for the insurer, who asked that he visit her home later that day. When the adjuster visited, he purportedly requested that the injured party sign certain documents, claiming that this would expedite the handling of her claim. The injured party (whose native language
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Eastern District of Pennsylvania Holds Insurer’s Denial of Uninsured Motorist Claim Brought by Policyholder Injured While Attempting to Prevent Robbery Was Not in Bad Faith
In Smerdon v. Geico Cas. Co., the United States District Court for the Eastern District of Pennsylvania examined an automobile insurer’s denial of an uninsured motorist claim. The claim concerned injuries sustained by the policyholder when she attempted to apprehend a robber of a store. Along with several other individuals, the policyholder chased the robber into the store’s parking lot. After the robber entered the vehicle, the policyholder opened the passenger door in an attempt to remove the keys from the ignition. The robber then started the vehicle, running over the policyholder and causing her to suffer serious injuries that
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California Appellate Court Reinstates Regulation Stipulating That Unfair Insurance Practices Act Claim May be Based Upon a Single Violation
In Pacificare Life and Health Ins. Co. v. Jones, the California Court of Appeal for the Fourth District reversed a trial court decision enjoining three recent regulations enacted by the California Insurance Commissioner with regard to the unfair claims settlement provisions of the state’s Unfair Insurance Practices Act. The first regulation at issue stated that the Act may be violated if a prohibited claims settlement practice is either “knowingly committed on a single occasion,” or “performed with such frequency as to indicate a general business practice.” The plaintiff insurer contended that this regulation was inconsistent with the Unfair Insurance Practices
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New Jersey Court Remands Summary Judgment in Favor of Insurers in Superstorm Sandy Policy Dispute Due to Trial Court’s Failure to Specify Grounds for Decision
In Doerfler v. Federal Ins. Co., the Appellate Division of the New Jersey Superior Court examined lawsuits brought by a policyholder against two insurers with regard to the denial of claims for damage to a residence arising from Superstorm Sandy. In each case, the insurer had denied coverage based upon the policy’s surface water exclusion. The policyholder asserted breach of contract and bad faith claims against the insurers. The bad faith claims were severed pending resolution of the breach of contract claims. Following discovery, the trial court granted the defendant insurers’ motions for summary judgment and denied the plaintiffs’ cross-motions
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Pennsylvania Superior Court Reverses $21 Million Verdict Against Automobile Insurer Regarding Decision to Repair Rather Than Total Vehicle
In Berg v. Nationwide Mut. Ins. Co., the Pennsylvania Superior Court examined a lengthy dispute arising from a first-party automobile insurance claim. After an accident, the initial damage estimate determined that the insured vehicle should be declared a total loss. The insurer subsequently concluded that the vehicle was repairable and directed a collision facility to undertake repairs. The plaintiff policyholders alleged that the repairs were insufficient and that the vehicle was left with permanent frame damage rendering it unable to withstand a collision. The policyholders filed suit against the insurer and repair facility, asserting claims for breach of contract, insurance
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Statutory Cause of Action for Insurance Bad Faith Remains Under Consideration by New Jersey Legislature
In a recent note, we discussed the New Jersey Legislature’s consideration of the Insurance Fair Conduct Act, which would establish a statutory cause of action for the bad faith handling of insurance claims. On April 12, 2018, the New Jersey Senate approved an amendment of the bill to exclude insurance producers and public entities. The bill remains under consideration before the Legislature. We will continue to monitor the progress of the bill and advise of further developments.
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New Jersey Legislature to Consider Statutory Bad Faith Cause of Action for Insurance Claims
The New Jersey Senate will soon vote on a bill that would establish a statutory cause of action for the bad faith handling of insurance claims. If enacted, the New Jersey Insurance Fair Conduct Act would create a private cause of action for “an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy.” The Insurance Fair Conduct Act would also create a private cause of action for any insurance unfair trade practices prohibited by N.J. Stat. 17:29B-4, including: misrepresentations of policy contracts; false advertising; defamation; unfair discrimination; and unfair claim settlement practices. The
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Washington Court of Appeals Holds That Statutory Bad Faith and Consumer Protection Claims May be Pursued Against Insurance Adjusters
In Keodalah v. Allstate Ins. Co., the Washington Court of Appeals reviewed an action against an insurer and an adjuster employed by the insurer for statutory insurance bad faith and violation of the state’s Consumer Protection Act, concerning the allegedly improper settlement of an underinsured motorist claim. The trial court dismissed the statutory bad faith and consumer protection act claims against the adjuster, on the grounds that such claims could not be pursued against employees of the insurer. The Court of Appeals began its analysis by noting that the Washington insurance bad faith statute imposes a duty of good faith
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Bad-Faith Failure-to-Settle Claims Accrues Only After Final Judgment, Delaware High Court Says
The statute of limitations for a bad-faith failure-to settle claim accrues when an insured suffers a judgment in excess of policy limits and that judgment becomes final and non-appealable, according to the Delaware Supreme Court. In Connelly v. State Farm Mut. Auto. Ins. Co., C.A. No. K14C-09-002 (March 4, 2016), the Court rejected State Farm’s contention that the bad-faith claim accrues only when the insurer allegedly acts in bad faith and breaches its duty to the insured. State Farm had provided a defense to its insured for a motor vehicle accident lawsuit. The driver offered to settle the case with
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