Insurers have a duty to process claims in good faith, but sometimes they farm the job out to third-party administrators (TPAs). If the TPA fouls up, many states hold that the insurer is still liable—for its own breach of duty, even if a doctrine of vicarious liability does not apply. The rule is summed up in the statement that the duty of good faith is not delegable; the insurer must either handle the claim in good faith or cause someone else to do so. But what ... Keep Reading »
Bad Faith
As Gunfire Thins the Ranks of the Employed, Employee Exclusions Hold the Line Against Coverage
As this blog has previously reported, accidents with guns are not likely to become less common any time soon. With home- and business-owners striving to find increasingly original ways to get shot, they will put increasing strain on the traditional language of the coverage exclusions in insurance policies. In Gear Automotive v. Acceptance Indemnity Insurance Company, No. 12-2446 (8th Cir. Mar. 18, 2013), the U.S. Court of Appeals for the Eighth Circuit recently ... Keep Reading »
Oregon Supreme Court Addresses Attorneys’ Fees for Appellate Proceedings in Class Action Over Automated Review of Medical Bills
Strawn v. Farmers Insurance Co. of Oregon is a class action that challenged the insurer’s use of automated bill review systems to determine the reasonableness of medical claims submitted under the Personal Injury Protection (PIP) coverage of automobile policies. The plaintiff alleged that Farmers had promised to pay the “reasonable” cost of covered medical services, but had failed to do so. In May 2011, the Supreme Court of the State of Oregon ruled that a class could ... Keep Reading »
In the Last Frontier, Insurers Shouldn’t Leave Defendants Out in the Cold
An Alaska politician once said of the folks she grew up with, "We grow good people in our small towns, with honesty and sincerity and dignity." But those virtues don’t exactly leap out of the story behind Williams v. Geico Cas. Co., No. S–14089 (Alaska Jan. 25, 2013), which mostly has to do with alcohol, selfishness and stupidity. At the climax of this sordid tale, a party to the lawsuit argued that an insurer’s refusal to offer policy limits for a release of only one ... Keep Reading »
Bad Timing Dooms Bad Faith Claim
A recent decision by a New Jersey Appellate Court clarifies both the scope of a New Jersey insurer’s duty of good faith in resolving a first-party uninsured motorist claim and the way in which claims for breach of that duty must be raised. The plaintiff in Wadeer v. New Jersey Manufacturers Ins. Co., A-3206-10T4 (N.J. Super. Ct. App. Div., Dec. 13, 2012), was severely injured when a “phantom vehicle” swerved into his lane and made him lose control of his car. He was ... Keep Reading »
Casting a Wide Net: Challenges to Lender-Placed Flood Insurance Erode Distinctions Between Banks and Insurers
As banks play an increasing role in the marketing and sale of property-casualty insurance products, the businesses of banking and insurance are becoming entangled. One place where they intersect is the purchase of lender-placed insurance protecting against floods and other hazards. Uniform mortgage agreements typically give banks a right to “require” their borrowers to maintain certain types of insurance on mortgaged property, and to separately purchase that insurance ... Keep Reading »
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