Insurance Bad Faith Report, April 2024

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Following fire damage to a used car Insurance dealership, its property insurer allegedly undervalued the loss. The insurer moved to dismiss, citing a two-year limitation clause in the policy. However, the insured argued that the bad faith claim was separate from the policy and not subject to the limitation. The district court disagreed, citing Connecticut cases that held bad faith claims are bound by policy limitations. The court also rejected the insured’s public policy argument. Read the decision.

Indiana District Court Balances Pleading Standard and Discovery Stay

In a case involving a business sued for negligence after a crane accident, the business sought indemnification from its insurers. The first layer excess insurer moved to dismiss the bad faith claim, arguing lack of allegations showing conscious wrongdoing, as required by Indiana law. The district court observed that bad faith need not be pleaded with particularity and found it adequately pleaded. However, it granted a stay on bad faith discovery as commencing it would be inefficient. Read the decision.

Dismissal of Bad Faith Counterclaim and Affirmative Defense in Illinois

After a hailstorm damaged apartment buildings, the insurer paid only a portion of the claimed loss. The insured alleged bad faith as both an affirmative defense and counterclaim. The district court dismissed the counterclaim, finding a bona fide coverage dispute and timely action by the insurer. It also struck the affirmative defense as it mirrored the dismissed counterclaim. Read the decision.

Post-Reservation Denial Not Considered Bad Faith in Washington

Following a construction worker’s injury, Evanston Insurance Company initially defended under a reservation of rights and subsequently denied coverage. Another insurer sued, claiming Evanston acted in bad faith. The court disagreed, stating it’s common for insurers to defend while investigating, and Evanston’s actions were proper. Read the decision.

Insurance Louisiana Court Dismisses Bad Faith Claim

An insured’s roof was allegedly damaged by hail. Although an assignment was executed, it didn’t specifically mention transfer of any bad faith claim. The court found bad faith claim was not included in the assignment and dismissal was warranted. Read the decision.

Indiana Court Upholds Historic Bad Faith Punitive Damage Award

In Insurance flooding case, a jury awarded $112 million against insurers, including punitive damages for bad faith. The district court upheld the award, highlighting insurers’ conduct that warranted such damages.

Insurer Appeals $29 Million Duty-To-Defend Case in North Carolina

An Insurance appeals a $29 million ruling for failing to defend its insured’s employee. The North Carolina Court of Appeals will review whether breaching the duty to defend warrants such penalties