The Washington Court of Appeals recently held that the obligation to act in “good faith” applies to the adjuster working for an insurer, not just the insurer that employed the adjuster. This rule not only permits insureds to go directly after the person at the insurance company responsible for denying a claim in bad faith, but it may also allow insureds to keep state-law claims filed in state court right where they were filed. Continue Reading Adjusters may be personally liable under Washington law
With the sanctity of any time-honored tradition, insurers resist discovery of their claim file with the ritualistic incantation that it is protected from discovery because it was prepared in anticipation of litigation, and therefore qualifies as work product. To support this argument, oftentimes insurers outsource the adjustment of the claim (a normal business activity) to outside attorneys, and then refuse to provide the attorney’s file, or communications with the insurer and the attorney, on the basis that those documents are protected by the attorney-client privilege. Courts across the county have been increasingly dismissive of these arguments, holding that an insurer cannot cloak its claim file with privilege simply by paying a lawyer to do what is otherwise an everyday claim handling activity for the insurer. Oregon finally has a chance to weigh in on this issue and level the playing field for insureds.
In Liberty Surplus Insurance v. Seabold Construction, the Supreme Court of Oregon has the opportunity to decide whether an insurer can conceal its claim handling by outsourcing it to lawyers. Continue Reading Insurers really don’t want you to know what’s in their files.
Insurers often loudly proclaim that, outside of certain very limited circumstances, there is no such thing as “bad faith” claims-handling under Oregon law. We believe that position, based on a narrow reading of outdated case law, is wrong. Nonetheless, insurers generally operate in Oregon under the assumption that they will never be exposed to extra-contractual or punitive damages. Consequently, even for entirely covered claims, low-ball settlement strategies are entirely too common, as the insurers see no real economic disincentive to mistreating their own policyholders. That could change for the better, however, if either of two bills introduced in the Oregon Senate become law this legislative session. Continue Reading 2015 Legislative Session Could Bring “Statutory Bad Faith” to Oregon
Broad and Ineffective “Reservation of Rights” Letter has Big Consequences
Insurers issue reservation of rights letters (“ROR Letters”) to contractors all the time. Typically, a contractor is sued, reports the claim, and one of the first responses from its insurer is an ROR Letter. They are generally long and regurgitate what seems like the entire policy without actually informing the contractor which provisions may actually matter in light of the allegations in the complaint.
The $5 Million ROR Letter
At least one court has held that ROR Letters that fit within this category can have big consequences that benefit insureds put in this unfair position. In Advantage Builders & Exteriors, Inc. v. Mid-Continent Cas. Co. (Mo. 2012), the court awarded $5 million in compensatory and bad-faith damages to a contractor arising from such an ROR Letter. Continue Reading Broad and Ineffective “Reservation of Rights” Letter has Big Consequences
A recent opinion from the Arizona Court of Appeals demonstrates the importance of being aware of varying states’ insurance laws. In Callies v. United Heritage Prop. & Cas. Ins. Co. (Mar. 18, 2014), the insureds, a husband and wife who lived in Oregon, were in the middle of a move to Arizona when their moving van and all of its contents were stolen. Their homeowner’s policy covered theft of personal property “while it was anywhere in the world.” At first, the insurer accepted coverage, leading the insureds to believe that only the valuation of their belongings stood between them and recovering for their loss. Continue Reading Choice-of-Law Analysis Makes All the Difference in “First Party” Bad-Faith Case