Blog Archives

WHOSE SETTLEMENT IS IT, ANYWAY? NEGOTIATING CONSISTENT WITH AN INSURER’S STRONG COVERAGE DEFENSES

This author suggested, in an earlier May 2016 Bad Faith blog article, that an insurer can measure on a “strength scale” its insurance coverage defenses while it defends its insured against underlying claims and lawsuits under a reservation of rights. The “strength scale” of coverage defenses, especially when subject to ongoing updates, can become a useful decision-making tool during settlement negotiations. An insurer has a legitimate basis to assess its coverage defenses as part of the settlement process when the coverage issues may render it unclear whose money will be used to pay for a judgment or settlement: the insurer’s money, the insured’s money, or combined contributions of both. “Bad faith” case law can be scarce, in many jurisdictions, regarding

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POLICY LIMIT DEMANDS + QUIRKY LEGAL ISSUES = CALL LAWYER

The recent California decision Barickman v. Mercury Casualty Company, 2016 WL 3975279, (Calif. App. – July 25, 2016), previously reported in Cozen’s bad faith blog on July 28, 2016, is worth revisiting on a bigger picture issue.  Low policy limit demands are often more dangerous than high policy demands.  This is because often times less experienced adjusters are assigned to lower policy limit cases and may not have recognized some of the red flags presented in Barickman and more importantly may not have recognized the need for legal advice.  In Barickman, those red flags were as follows:  (1) serious injuries; (2) clear liability; (3) low policy limits; (4) policy limits demand made with short time fuse to respond; (5) numerous

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When a Policy Limits Offer is Not Enough: A Cautionary Tale of a Failure to Settle Case

In a recent unpublished decision, the California Court of Appeals upheld a $3 million judgment against an auto liability insurer that rejected proposed language in a settlement agreement, notwithstanding the insurer’s policy limits offer. Barickman v. Mercury Opinion, 2016 WL 3975279 (Cal. Ct. App. 2016) (unpublished). Although unpublished and not binding precedent, Barickman raises several claim handling issues which may be useful for carriers to consider. Barickman arises from a personal injury claim in which the insured, Timory McDaniel struck two pedestrians while driving under the influence. McDaniel fled the scene but was later apprehended. She reported the claim the following day to her insurer Mercury Casualty Company as an accident without further detail. Within eight weeks of receiving notice

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The Duty to Follow-up Part II: When The Underlying Litigation Changes

In many states, an insurer not only has a duty to timely communicate with its insured and respond to demands for settlement by a claimant asserting a claim regarding the adjustment of a loss, that duty may also include the duty to follow-up on those communications.  Recent case law further emphasizes the importance of follow-up in the context of an offer to settle made by a tort claimant, as well as when the insurer is apprised of changes to the status of claims and defenses in the underlying tort case.  Neglecting the duty to follow-up can cost an insurer – converting a $25,000 claim to a $7 million loss.  As a recent case decided by the United States District Court

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The Duty to Follow-up: How A $25,000 Offer To Settle Turns Into A $7 Million Loss

In many states, an insurer not only has a duty to timely communicate with its insured and respond to demands for settlement by a claimant asserting a claim regarding the adjustment of a loss, that duty may also include the duty to follow-up on those communications.  As a recent case decided by the United States District Court for the Northern District of Illinois shows, the costs of not doing so, even on a relatively small claim under a low limit policy, can be catastrophic. Horace Mann Insurance Company provided automotive insurance limits of $25,000.  Less than 45 days after a motor vehicle accident involving its insured near Tampa, Florida in which the insured’s SUV collided with a motorcycle, Horace Mann

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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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