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

Mississippi Rejects Blue Ridge Doctrine

In Colony Ins. Co. v. First Specialty Ins. Corp., 262 So. 3d 1128 (Miss. 2019) , the Mississippi Supreme Court, as a matter of first impression, found that a liability insurance company could not fund a settlement under a reservation of rights and then seek reimbursement of its payment from the insured. According to the Court, the insurance company must make a selection of either absorbing the settlement or rejecting the demand with the hopes that it would prevail on its declaratory judgment action. In so finding, the Court held that while a payment which is made under compulsion is not a voluntary payment, the mere threat of a lawsuit was not the type of compulsion that would render an insurance payment non-voluntary. Insurers should pursue a declaratory judgment action as a legal avenue for determining coverage obligations. Settling the case before receiving a ruling on the coverage obligations resulted in the insurer having no right to seek reimbursement of the settlement payment that it might not otherwise have been obligated to make.

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