Rhode Island Supreme Court Says That Insurance Companies Do Not Owe Third-party Claimants Any Duty To Attempt Settlement

In Summit Insurance Co. v. Stricklett, 199 A.3d 523 (R.I. 2019) the court found that the insurer did not owe a minor child pedestrian who was struck by the insured’s vehicle or the child’s parents any duty to attempt to settle the child’s personal injury claim. The court resoundingly rejected the claimant’s argument that the insurance company owed them a duty of good faith and fair dealing in settlement negotiations. In rejecting this assertion, the court discussed how the insurer’s duty to settle arose from the contractual fiduciary duty that was owed between the insurer and its insured. In contrast, the relationship between the insurance company and a third party was adversarial, which did not give rise to a fiduciary obligation on the part of the insurance company to the claimant.