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Procedural Bad Faith Claims Against Insurers: Understanding and Avoiding the Risks; Defenses; Evidentiary Issues

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, January 18, 2022

Recorded event now available

or call 1-800-926-7926

This CLE course will discuss when and why an insurer might be exposed to damages for alleged bad faith conduct even if it fully complied with its contractual obligations by paying a claim in full or properly denying it. With more frequent claims, counsel for insurers must understand what type of conduct puts their clients at risk. The panel will review the status of this claim in different jurisdictions, strategies for avoiding the claim, and evidentiary and other issues that may arise in defending or asserting it.

Description

An insurer may be accused of engaging in procedural bad faith based on claims that its coverage decision was unreasonable, whether or not its ultimate conclusion was correct, and the insurer did not deny the policyholder any covered benefits. However, the "no harm-no foul" rule may not necessarily be a defense against a tort claim alleging violation of the duty to act in good faith.

The factual predicates for procedural bad faith vary but include alleged oppressive and intimidating claim practices, superficial investigation, failure to consider all available coverage and losses, providing inaccurate information, and delayed communications. States differ on whether a claim can be grounded in conduct before a lawsuit is filed or decided and whether conduct during litigation is actionable. If a party alleges counsel's acts during litigation support bad faith, counsel's files and work product may be at risk.

Once claims of procedural bad faith are asserted in a lawsuit, the dynamics between policyholder and insurer get more complicated. Procedural bad faith claims can confuse the distinction between claims adjustment activities and litigation activities, jeopardizing privilege. Nonetheless, insurers can reduce the risk of procedural bad faith allegations and deftly manage them.

Listen as this panel discusses this increasingly encountered claim from both first-party and third-party matters.

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Outline

  1. Development of procedural good faith
  2. Recurring fact patterns
    1. Acts before claim submission
    2. Acts related to claim assessment
    3. Conduct during litigation
    4. Conduct after adjustment
  3. Defenses
  4. Evidentiary issues

Benefits

The panel will review these and other pivotal issues:

  • Can an insurer's conduct before a claim constitute bad faith?
  • Can procedural bad faith claims arise while insurers are still evaluating claims?
  • Can conduct that occurs in litigation between the insurer and a policyholder amount to procedural bad faith?
  • If so, are defense counsel's files discoverable? Admissible?
  • Can denying the policyholder or its third-party assignee access to the claim file be the basis of a procedural bad faith claim?

Faculty

Aldama, Karin
Karin Scherner Aldama

Partner
Perkins Coie

Ms. Aldama focuses her practice on complex insurance recovery matters. She has represented policyholders on a number of...  |  Read More

Eyerly, Tred
Tred R. Eyerly

Director
Damon Key Leong Kupchak Hastert

Mr. Eyerly has accumulated a wide variety of litigation skills, having practiced in Alaska, Commonwealth of the...  |  Read More

Torres, Anna
Anna D. Torres

Founder
TorresVictor

Ms. Torres' experience includes both large firm and boutique firm environments. Her practice has always focused...  |  Read More

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