On March 11, 2019, the Georgia Supreme Court handed down an important decision in First Acceptance Insurance Company of Georgia, Inc. v. Hughes, which further clarifies the circumstances under Georgia law for when an insurer may be liable for bad faith in refusing to settle a claim within policy limits. In Hughes, the insured caused a multi-vehicle accident and resulting injury to five individuals. An attorney who represented two of those individuals – Julie An and ... Keep Reading »
Bad Faith
Nevada Supreme Court Holds That Insurer’s Liability for Breach of the Duty to Defend is Not Capped at Policy Limits
In Century Surety Company v. Dana Andrew (Dec. 13, 2018), the Nevada Supreme Court issued an opinion regarding whether, under Nevada law, the liability of an insurer that has breached its duty to defend, but not acted in bad faith, is capped at the policy limit plus any costs incurred by the insured in mounting a defense, or whether the insurer is liable for all losses consequential to the insurer's breach. Ryan Pretner ("Pretner") and Pretner's guardian (Respondents) ... Keep Reading »
When Evidentiary Error Matters: Eleventh Circuit Affirms Decision to Grant Retrial
The U.S. Court of Appeals for the Eleventh Circuit recently closed the book on litigation in which GEICO had been involved since 2010, holding that the granting of a retrial—which resulted in a GEICO victory after an initial verdict of more than $5 million had been rendered against the insurer—was warranted and appropriate. See Joshua Moore v. GEICO General Ins. Co., No. 17-13655 (11th Cir. Dec. 14, 2018). The story began with a rejected GEICO settlement offer following ... Keep Reading »
Dot the I’s and Cross the T’s: the Importance of Clarity in Claim Communications and the Availability of Punitive Damages for an Insurer’s Bad Faith Failure to Settle
The Georgia Court of Appeals recently made waves in Hughes v. First Acceptance Insurance Company of Georgia, Inc., 343 Ga. App. 693 (2017). First, it aggrandized the role of a jury in determining the existence of an offer to settle a claim where the text of purported offer letters was not in dispute. Second, it subtly reminded litigants that punitive damages are available in a bad faith failure-to-settle claim where the claim sounded in tort and had not been ... Keep Reading »
Pennsylvania Supreme Court Clarifies Showing Required for Bad Faith Insurance Claims
The Pennsylvania Supreme Court has, for the first time in the 37-year history of Pennsylvania’s bad faith insurance statute, 42 Pa.C.S. § 8371, considered the necessary elements of such a claim, and it has determined that proof of an insurer’s motive of self-interest or ill will are not required. See Rancosky v. Washington Nat'l Ins. Co., 28 WAP 2016 (Pa. Sept. 28, 2017). The case arose from a supplemental cancer insurance policy that plaintiff LeAnn Rancosky ... Keep Reading »
Poisoning the Well: Washington Supreme Court Applies Efficient Proximate Cause to Eviscerate Pollution Exclusion in Liability Policy
Professionals and practitioners in first party property insurance are likely familiar with the efficient proximate cause rule, which requires an insurance policy to provide coverage where "a covered peril sets in motion a causal chain," even if subsequent causes-in-fact of the loss are excluded by the policy. As indicated by our previous coverage [1, 2, 3] of this doctrine, this can be a confusing analysis that leads to unpredictable results. Until recently, the ... Keep Reading »
Shot Through the Heart, But the Excess Carrier Isn’t to Blame: Georgia Federal Court Finds Policy’s Broad Firearms Exclusion Bars Coverage
On June 1, 2017, the U.S. District Court for the Northern District of Georgia granted summary judgment in favor of AIG Specialty Insurance Co. in a case involving the application of the firearms exclusion in Powe v. Chartis Specialty Insurance Co., No. 1:16-CV-01336. The court dismissed the case, in which claimant Christopher Powe sought the remaining $3 million of a $4 million settlement against the insureds, property management company HMI Property Solutions, Inc. ... Keep Reading »
Texas Supreme Court Clarifies When Insured May Recover Policy Benefits
In an effort to clarify over 20 years of conflicting precedent, the Texas Supreme Court announced five rules that, according to the court, explain the relationship between claims for breach of insurance policy and extra-contractual claims for bad faith and violations of the Texas Insurance Code. USAA Texas Lloyds Co. v. Menchaca, No. 14-0721, slip op. at 6 (Tex. April 7, 2017). Although an insurance policy is an agreement between the parties that is generally governed by ... Keep Reading »
Blowing the Whistle on Willful Misconduct: California Court holds that False Claims Act Suits Are Uninsurable Due to Public Policy
Willful misconduct is uninsurable. It is a fundamental principle of insurance, and it makes sense to both the lay and the lawyerly. But few states go as far as to codify this principle in the insurance code. California is an exception. In Office Depot, Inc. v. AIG Specialty Insurance Company, Case No. 15-02416-SVW-LPRx (C.D. Cal. Jan. 4, 2017), the U.S. District Court for the Central District of California held that Section 533 of California’s Insurance Code relieved ... Keep Reading »
Third Circuit Affirms Rescission of $25 Million Contaminated Products Policy
In H.J. Heinz Co. v. Starr Surplus Lines Ins. Co., No. 16-1447 (3d Cir. Jan. 11, 2017), the Third Circuit affirmed a District Court’s order allowing insurer Starr Surplus Lines Insurance Company (“Starr”) to rescind a $25 million Contaminated Products Insurance (CPI) policy that it sold to food manufacturer H.J. Heinz Company (“Heinz”), on the basis that Heinz failed to disclose material information in its insurance application. After Starr declined coverage, Heinz ... Keep Reading »
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