Interest can be recovered for money unpaid, such as a bank loan. There, interest compensates for the loss of use of money.
Interest can also be recovered when the law provides that money should have been paid, but was not paid. This is a penalty. It is usually imposed under a statute, which is strictly construed.
In either case, as compensation or as a penalty, interest is payable because the money due to you is treated as "overdue". Recently, the Wisconsin Supreme Court construed a statute allowing interest on "overdue" insurance claims, Wis. Stat. ยง 628.46. For the first time, in Kontowicz v. American Standard Insurance Co., 290 Wis. 2d 302, 714 N.W.2d 105, 2006 WI 48 (2006)(subscription required to access Northwestern Second), access public site at Kontowicz Wisconsin Supreme Court site, the Wisconsin high court applied this Wisconsin interest-on-overdue-insurance-claim statute to liablity or "Third Party" claims. In Third Party Bad Faith cases, to put this holding in context, there is almost always a judgment or a settlement at the end of the underlying case which exceeds the liability policy limit. The later Third Party Bad Faith case ordinarily is filed to shift the excess liability (where the insurance contract provides coverage for the policy limits) to pay the injured claimant, from the shoulders of the insured-policyholder to the liability insurance company because the excess would not have happened but for the Third Party Bad Faith by the insurance company, in basic terms. There is nothing "overdue" there.
Now, in Wisconsin, there is.
That is a very important departure from pre-existing law. I will have more to say in future posts about the many other important issues this new case represents.
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
Comments