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Navigating Bad Faith Claims by Non-Insureds (“Third-Party Bad Faith Claims”): Differing State Laws and the New ALI Restatement of the Law of Liability Insurance

Recording of a 90-minute CLE webinar with Q&A

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Conducted on Wednesday, August 14, 2019

Recorded event now available

or call 1-800-926-7926

This CLE course will discuss the rights and obligations of insurers, policyholders, and non-insureds in circumstances where a non-insured asserts an insurance bad faith claim against an insurer. The parties’ rights and obligations vary markedly from jurisdiction to jurisdiction. Our panel will address the viability of bad faith claims by non-insureds, strategies for defending against and recovering on such claims, and the current and varied status of statutory and case law in representative jurisdictions.

Description

A bad faith claim may arise when an insurer fails to settle a claimant’s liability claim brought against its insured for an amount within the policy limits and a verdict over the limits is then obtained, exposing the insured to liability for the excess amount. While it is generally accepted in many jurisdictions that, under certain circumstances, the insured has a right to recover from the insurer the total amount of the judgment, even if it exceeds the policy limits, the rights of non-insureds (typically the plaintiffs who brought the lawsuit against the insured in the first place) are less certain under these circumstances. Notably, some states allow the non-insured claimant to bring lawsuits for the insurer’s bad faith failure to settle the claim within the policy’s limits. Where allowed, such claims may be based in the common law or in state statutes governing the situation.

These claims, if proven, can lead to significant damages awards against insurers. There are other effects as well: to cite but one example, a 2018 report by the Insurance Research Council estimated that between 2006 and 2017, Florida’s non-insured bad faith rules resulted in $7.6 billion more in claims than otherwise expected.

Listen as our panel of insurance law specialists examines non-insured bad faith claims from the perspective of both the policyholder and the insurer, particularly in light of recent cases and the 2018 ALI Restatement on Liability Insurance. The panel will discuss best practices and strategies for each side in litigation where a non-insured has brought a bad faith claim against an insurer.

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Outline

  1. Overview
  2. State laws and recent developments
  3. ALI 2018 Restatement of Liability Insurance
  4. Policyholder perspectives
  5. Insured perspectives
  6. Best practices and practical strategies

Benefits

The panel will review these and other key issues:

  • Which states allow statutory non-insured or third-party bad faith claims?
  • Which jurisdictions allow common law non-insured or third-party bad faith suits?
  • What are the elements that support a claim of a non-insured or third-party bad faith?
  • What are the insurers’ and the policyholders’ obligations?
  • What are effective methods for a non-insured to prove an action for non-insured or third-party bad faith, and what are the insurers’ best defenses to such claims?
  • What are the most recent cases affecting these types of claims?
  • What impact has the ALI’s 2018 Restatement of Liability Insurance had on third-party bad faith litigation?

Faculty

Jacobus, Alan
Alan P. Jacobus

Alan P. Jacobus, Attorney at Law

Mr. Jacobus' practice over the past decade has largely centered on high risk, high value insurance coverage...  |  Read More

Levin, Bradley
Bradley A. Levin

Shareholder
Levin Sitcoff Waneka

Mr. Levin focuses his practice on tort and commercial litigation, especially insurance bad...  |  Read More

Mascia, Raymond
Raymond A. Mascia, Jr.

Shareholder
Anderson Kill

Mr. Mascia’s practice concentrates in commercial litigation and insurance coverage litigation exclusively on...  |  Read More

Saltzman, Michael
Michael S. Saltzman

Partner
Goldberg Segalla

Mr. Saltzman concentrates his practice in insurance coverage and defense, commercial litigation, construction,...  |  Read More

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