The Delaware Supreme Court weighs in on when a bad faith claim accrues in a bad faith refusal to settle case. In Connelly v. State Farm Mut. Auto. Ins. Co., 2016 WL 836983 (Del. March 4, 2016), the Intermediate Appellate Court found that the bad faith claim accrued when the insurer refused plaintiff’s offer to settle for 35% of the policy limits. The Supreme Court reversed holding that the cause of action accrued when the excess judgment became final. This approach reduced the possibility of a conflict of interest between the insurance company and its insured, protected insurers from bad faith claims for failing to settle even the most frivolous claims and would have the beneficial effect of saving the insured litigation costs that might turn out to be unnecessary if the trial court did not order an excess judgment.
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