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Large Deductibles and Self-Insured Retentions – Potential Bad Faith Exposures

As the economy recovers from the Great Recession, the insurance industry is experiencing an increase in the need to evaluate risk retention and risk transfer mechanisms tailored to the commercial policyholders’ risk management goals as applied to its policy provisions and obligations owed to its insured. Whether labeled as a large or high deductible, matching deductible, or self-insured retention, these mechanisms are governed by the plain language of the relevant policy provision or endorsement and insurers and insureds alike can minimize potential exposures by ensuring that the relevant policy language aligns with their intent. In addition, these vehicles bring their own set of unique considerations in order to maintain good faith practices. For example, in Roehl Transport, Inc. v. Liberty Mutual

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Posted in Bad Faith

Connecticut Court Confronts Duty to Investigate

In Capstone Building Corp. v. American Motorists Ins. Co., 2013 Conn. LEXIS 187 (Conn. June 11, 2013), the Supreme Court of Connecticut declined to recognize a cause of action for an insurer’s alleged bad faith conduct in investigating a general liability insurance claim, relying on the policy terms which expressly granted the insurer discretion to conduct an investigation.  The Capstone court also addressed other certified questions including whether faulty construction work could be an “occurrence,” the meaning of “property damage” and application of the business risk exclusions.  As to the bad faith issue, the court held that a bad faith action “must allege denial of the receipt of an express benefit under the policy.”  Id. at *64.  The court reasoned

Posted in Bad Faith
Avoiding Insurance Bad Faith
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action. More
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