COPYRIGHT DENNIS J. WALL 2010. Reprinted With Permission.
LIABILITY INSURERS SETTLING THIRD-PARTY CLAIMS:
by
Dennis J. Wall, Esquire
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7. Are there other standards required by
Another standard is that the Liability Insurer's decision not to settle a particular underlying claim must be "realistic" in the glare of the Liability Insurance Company's presumed expertise in settling claims.
Further, after a Trial has resulted in a Verdict and/or a Judgment against the Policyholder/Insured, the emerging view among the Courts has it that the Liability Insurance Company's decision to appeal the excess Judgment will be even more strictly reviewed in terms of Good Faith - Bad Faith in settlement.
8. Do Courts in any jurisdictions in the U.S. treat a Liability Insurance Company's conduct in settlement negotiations as requiring something less than deceit or misrepresentation, for example?
Yes, for example the
This is another example of why, due to the wide variation in how the Courts state and apply legal standards of Good Faith and Fair Dealing, that it is so important to consult the law of a particular jurisdiction where your Good Faith - Bad Faith Claims might arise.
9. Does any jurisdiction lump all the Good Faith and Fair Dealing standards together for all cases of alleged Bad Faith in settlement, or in failing to Defend, or in providing a poor Defense under the particular Liability Insurance Policy?
Yes, "probably". The reason for the qualification is that the answer in one case, decided by the Florida Supreme Court in 1995, held that both Third-Party Bad Faith actions and First-Party Bad Faith actions (i.e., actions involving alleged Bad Faith under a Policy such as a Fire, Renter's or Business Property Policy, under which the Policyholder/Insured makes a direct or "first" party claim for benefits), should all legally be treated the same way -- at least in a case like that one, where the claim presents an issue of whether it is Covered under the given Insurance Policy. See State Farm Mutual Automobile Insurance
10. Are the standards of liability for "Bad Faith" in settlement by Liability Insurance Companies applied "after the fact" to settlement decisions by Liability Insurance Companies?
No, not generally. There is no absolute Liability in Courts in the
11. What are good sources of further information on this topic?
Resources: Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" (Second Edition Shepard's/McGraw-Hill; 2009 Supplement West Publishing Company); and John K. DiMugno, Steven Plitt, and Dennis J. Wall, "CAT Claims/Insurance Coverage for Natural and Man-Made Disasters" (Thomson West 2008; 2009 Supplement).
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