Steven Plitt, Expert Witness Steven Plitt, Expert Witness
Insurance Bad Faith Claim Handling Expert Serving Clients Nationwide

August 2017 Archives

Rhode Island Supreme Court Adopts When the Insured Receives Notification of Policy Updates or Renewal Notices Reflecting the Error

Recently, the Rhode Island Supreme Court in Faber v. McVay, 155 A.3d 153 (R.I. 2017), the court held that Rhode Island's three-year statute of limitations against an insurance agent began to run when the insured received an update of the changes made to his policy after the insured changed carriers and also began to run when the insured received notice of renewal of the policies after the agent or agency informed him that his policies would be reviewed.

AN INSURANCE COMPANY CAN AFFIRMATIVELY CREATE A NEW AND INDEPENDENT TORT TO A CLAIMANT AS A RESULT OF THE INSURER'S CLAIM HANDLING ACTIVITIES SAYS THE ALASKA SUPREME COURT

In Burnett v. GEICO, 389 P.3d 27 (2017) the Alaska Supreme Court, as a matter of first impression, held that a liability insurer can owe a tort duty to a third-party claimant when the insurer's claims handling actions affirmatively create a new and independent duty to the claimant. In Burnett, GEICO's insured crashed into a cabin which caused, in part, a fuel leak. The fuel leak was required to be remediated environmentally in accordance with the Alaska Department of Environmental Conservation (DEC) standards. GEICO hired a contractor to perform an environmental site assessment and to coordinate the necessary clean-up of the spill. However, GEICO delayed in the remediation effort. As a result, the fuel spill spread underneath the cabin itself. Because of this, the cabin owner sued not only the GEICO insured for the accident, but also GEICO for its negligent activities in timely cleaning up the environmental spill.

COLORADO COURT OF APPEALS ISSUES A SIGNIFICANT OPINION ON DAMAGES UNDER COLORADO'S UNREASONABLE DELAY STATUTE

The Colorado Court of Appeals in Nybert v. GEICO Casualty Co., 2017 WL 710504 (Colo. Ct. App. February 23, 2017) issued two significant rulings regarding Colorado's Unreasonable Delay Statute, Section 10-3-1116. In the first ruling, the Court held that the trial court was permitted under the statute to award the insured twice the amount of the delayed benefit in addition to the actual policy benefit that was delayed. In the second opinion, the Court found that an award of statutory attorney's fees to the insured could be made without regard to the period from when the benefit was first delayed to the date when it was actually paid and without regard to whether the fee award concerned a contractual claim.

OREGON SUPREME COURT RULES THAT UNDER ORS §742.061 AN INSURER'S VOLUNTARY PAYMENTS TO THE INSURED AFTER THE INSURED FILED SUIT AND THE APPRAISERS ISSUED AN AWARD WHICH ALSO WAS PAID WAS A "RECOVERY" ENTITLING THE INSURED TO AN AWARD OF ATTORNEYS' FEES

Under ORS §742.061 insurance companies are required to pay their insured's attorneys fees if, in the insured's lawsuit against the insurer, the insured obtains a "recovery" that exceeds the amount of any tender made by the insured within six months from the date that the insured first filed a proof of loss. In Long v. Farmers Insurance Company of Oregon, 360 Or. 791, 388 P.3d 312 (2017), the Oregon Supreme Court held that when an insured files an action against an insurer to recover sums owing on the insurance policy and the insurer subsequently pays the insured more than the amount of any tender made within six months from the insured's proof of loss, the insured obtains a "recovery" that entitles the insured to an award of reasonable attorney's fees notwithstanding the voluntary nature of the insurance company's payment. In essence, the court found that the term "recovery" included any kind of restoration of the loss, including a voluntary payment of a claim made after an action on the insurance policy had been filed. In determining whether a qualifying "recovery" has taken place for purposes of ORS §742.061, all that matters is that, after filing an action on an insurance policy, the insured obtains more from the insurer-irrespective of whether through judgment, settlement, voluntary payment or some other means-than the insurer tendered in the first six months after proof of loss, an award of attorney's fees is appropriate under the statute. The Court found that in the context of the statute, "recovery" was not limited to a money judgment rendered in the action in which attorney's fees were sought. The insured was not required to obtain a money judgment that exceeded any tender within the first six months after the insured submitted the proof of loss.

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