Court Rulings Impacting Insurance Bad Faith Claims and Policy Endorsements

The South Carolina Court of Appeals, in the case of Speights v. Chubb Ltd., has examined the applicability of specific policy endorsements involving theft and forgery. An insured attorney's bookkeeper was misled into transferring $250,000 to a hacker disguised as the attorney. The court evaluated both the Money and Securities endorsement and the Forgery and Alteration endorsement. It concluded that the latter was inapplicable as the fraudulent emails did not constitute forged instruments. Furthermore, the court upheld the false pretenses exclusion, emphasizing that transferring funds under false pretenses does not violate the theft endorsement.

In New Jersey, the appellate decision in Tenenbaum v. Allstate Ins. Co. focused on procedural aspects of bad faith claims under the Insurance Fair Conduct Act. The court ruled for the insurer, noting that the trial court should have severed and delayed discovery on bad faith matters until after resolving the uninsured motorist claim. This decision underlines the importance of efficiency and cost management within litigation.

Texas saw a clarification in In re Ace Am. Ins. Co., where the Supreme Court confirmed that allegations of bad faith do not invalidate the requirement for appraisal. The case hinged on a significant mold remediation claim, reinforcing appraisal clauses in resolving insurance disputes.

The New Jersey Supreme Court further clarified insurer obligations in Mist Pharm., LLC v. Berkley Ins. Co., supporting the insurer's decision not to contribute to a settlement due to the D&O policy's capacity exclusion. The court held that this conduct did not constitute bad faith.

Moving to the Eighth Circuit, the ruling in Child. v. Unum Life Ins. Co. of Am. established that an insurer's reasonable basis for denying coverage negates the relevance of investigative shortcomings in bad faith claims.

In the Northern District of Florida, Evangel Worship Ctr. Assembly of God, Inc. v. Ohio Sec. Ins. Co. addressed timing issues in statutory bad faith claims, opting for dismissal over abatement due to a lack of actual controversy jurisdiction.

Finally, in the Western District of Washington, the court in Ziwen Li v. Am. Family Mut. Ins. Co. S.I. allowed a common law bad faith claim specifically against an insurance adjuster. This decision highlighted the adjuster's actions as separate from the insurer's liability, differing from recent Washington Supreme Court interpretations.