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

April 2020 Archives

IMMUNITY MATTERS

Recently the U.S. Fifth Circuit Court of Appeals held, predicting the law of Mississippi, that when a driver was immune from suit, UIM coverage was not triggered because the insured would not be "legally entitled" to recover damages from a tortfeasor with no civil liability due to immunity.

ARE YOU A VOLUNTEER? THE MISSISSIPPI COURT WEIGHS IN

Recently, the Mississippi Supreme Court adopted a broad interpretation of the "volunteer defense" to claims asserting equitable subrogation and indemnity. The Court in Colony Ins. Co. v. First Specialty Ins. Corp., 262 So.3d 1128 (Miss. 2019) held that when an insurance company settles a claim while it was simultaneously contesting whether it had an insured relationship with the putative insured defendant, the settling liability insurer acted as a volunteer in settling the claim and, therefore, could not bring an equitable subrogation against other insurance companies.

BOTH THE INSURANCE COMPANY AND THE INSURANCE BROKER ARE REQUIRED TO PROVIDE THE MORTGAGEE WITH A STATUTORY CANCELLATION NOTICE OF THE POLICY FOR NONPAYMENT OF PREMIUM IN MISSISSIPPI

In James Allen Ins. Brokers v. First Financial Bank, 267 So.3d 759 (Miss. 2019), the Court held that a mortgagee was entitled to coverage under a binder notwithstanding the insured mortgagor's failure to pay the initial policy premium. In this case, the insurance company and broker were liable to the bank as the holder of the mortgage on an insured poultry farm. The farm suffered a fire loss that occurred after the broker had issued an insurance binder covering the farm. The insured did not pay the initial premium for the insurance coverage. Nevertheless, under the terms of the binder, coverage had gone into effect without payment of the premium. Under Mississippi law, the Court found that the insurer and the broker were required to provide notice to the mortgagee or the named creditor loss payee in the binder before cancelling the policy for nonpayment of premium. Because the required notice was not provided, the trial court granted summary judgment in favor of the mortgagee on its claim that the insurance company had failed to pay amounts due under the binder.

ILLINOIS LAW REQUIRES A TWO-PRONG DETERMINATION IN BAD FAITH FAILURE TO SETTLE CASES

Recently the 7th Circuit Court of Appeals held, interpreting Illinois law, that to establish a bad faith failure to settle case under Illinois law, the claimant must prove both reasonable probability of liability and reasonable probability of damages in excess of the policy limits. In Surgery Center at 900 North Michigan Avenue, LLC v. American Physicians Assurance Corp., 922 F.3d, 778 (7th Cir. 2019), the Court found that Illinois law required there to be both a reasonable probability regarding a liability finding, as well as a reasonable probability that a damages award would exceed the policy limits in order to establish a bad faith failure to settle case.

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