Bad Faith(Mo. App. Jan. 4, 2007)Ruling: Attorneys fees were awarded under Missouri’s “Vexatious Refusal to Pay” statute. Insured brought suit against insurer for denial of homeowners coverage. In addition to an award for insured’s loss, the jury awarded penalties and attorney fees pursuant to Missouri’s “Vexatious Refusal to Pay” statute, which permits a jury to award damages upon finding that the insurance company “has refused to pay such loss without reasonable cause or excuse.” Insurer contended that it had reasonable cause to believe that insured intentionally set a fire that resulted in the loss, and had a right to refuse payment and litigate the issue without incurring penalties under the “Vexatious Refusal to Pay” statute. Appellate court disagreed, affirming the award, upon finding that evidence in the record demonstrated insurer’s “vexatious and recalcitrant attitude” in denying the claim, including insurer’s failure to state its grounds for denial, inadequate investigation of the claim, and “disparate” treatment of insureds.
Underinsured BenefitsBartleson v. Grinnell Mutual Reinsurance Company(Iowa App. Nov. 9, 2005)Ruling: Oral binder for UM benefits was extinguished upon issuance of new policy without UM coverage. Insured’s daughter brought suit against automobile insurer, alleging that she was entitled to underinsured motorist benefits. After the insured’s daughter was involved in an automobile accident (the daughter was a passenger in an underinsured vehicle), the insurer paid the statutory minimum payment of $20,000 to the insured’s daughter. Thereafter, the insured’s daughter commenced an action seeking a declaration that she was entitled to $100,000 under her father’s underinsured motorist coverage. The Iowa Court of Appeals affirmed judgment in favor of the insurer, finding that although the insured did not effectively cancel underinsured motorist coverage on his daughter’s behalf prior to her accident, any oral binder between the insured’s daughter and the insurer for underinsured motorist benefits was extinguished when the insurer issued a new policy to the daughter.
Auto Coverage(N.Y. App., 2nd Dept., Nov. 7, 2005)Ruling: Insured’s failure to cooperate precludes coverage under policy. Allstate issued auto policy to Guillame, who was involved in a motor vehicle accident with a vehicle owned by Lespinasse, insured by State Farm. State Farm disclaimed coverage on the ground that Lespinasse failed to cooperate under the terms of his policy. The Second Department affirmed the trial court’s denial of the petition to stay arbitration for uninsured motorist benefits, finding that State Farm’s disclaimer was valid and, therefore, the vehicle was uninsured.
Source: Goldberg Segalla LLP