Standard "Overdue" Statute Empowers Third Parties to Collect Interest.
Today's post picks up where yesterday's post left off: In the ordinary Third Party situation, Bad Faith remedies are available to shift the excess liability to pay the injured claimant. Bad Faith remedies exist to shift that liability from the insured-policyholder to the liability insurance company after there is an amount in "excess" of the liability policy limits in a judgment, or in a settlement, at the end of the underlying case. There was nothing "overdue" there. Now, there is.
There is now a duty under the standard "overdue" insurance claim statute which the liability carrier of the defendant, the policyholder, owes directly to the injured claimant who has brought a claim or filed a lawsuit against the insured-policyholder. It is a duty to pay interest from the moment that the injured person's claim against the insured-policyholder can be determined to be "overdue". These are the views resulting from decision in the Kontowicz 2006 Case (Wisconsin Supreme Court site).
In future cases in Wisconsin and in jurisdictions following the Wisconsin lead, liability insurance companies after this new Kontowicz case may pay a form of damages which never before existed, if they do not fulfill a duty they never had before: Damages for statutory interest when they do not pay claims made or lawsuits filed against their policyholders and other insureds.
In Kontowicz, interest under the Wisconsin statute was recovered beginning from an "overdue" date long before the injured claimant recovered any judgment against or settlement with the insured-policyholder. The obligation to pay interest is clearly a new duty. It is a duty which must be fulfilled toward injured claimants by the liability insurers of the defendants sued by the injured claimants where, and only where, the defendants purchased liability insurance. The defendants themselves do not owe this duty, whether or not the defendants purchase liability insurance.
Interest-on-overdue-insurance-claim statutes, like the one involved in the Wisconsin case, make only insurance companies liable for "overdue" payments. Without saying "why not," the Wisconsin Supreme Court majority in the new Kontowicz case noted that the statutory liability on insurance companies is not the same thing as Bad Faith and, the majority also noted, again without saying "why not," the statute does not impose a penalty.
If you know of statutes and cases in which liability insurance companies are required to pay interest on overdue claims to injured claimants, I would like to hear about them. If this be an emerging view, it is important for policyholders, injured claimants, and their lawyers to know.
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.
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