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A brief look at insurers’ obligation of good faith, and bad faith insurance claims, P.1

In our last post, we briefly looked at an ongoing legal battle between Walmart and its insurers over a settlement the retail giant reached with actor-comedian Tracy Morgan, who was seriously injured in a 2014 accident involving a Walmart truck driver. As we noted, Walmart claims that its insurers acted in bad faith in refusing to cooperate with the settlement, while the insurers claim that Morgan exaggerated his injuries.

Insurance is certainly an important financial resource for anybody who incurs financial loss or liability in connection with a motor vehicle accident. This includes not only accident victims, but also employers who have to answer for the negligence of employees, those responsible for accidents caused by minors, bars who over-serve their patrons and thus contribute to drunken driving, and other third parties who have responsibility for those who cause motor vehicle accidents. 

Insurance companies are bound by a duty of good faith and fair dealing with respect to their insured. This generally means that insurers are bound to deal justly with their insured in processing, settling, and paying claims according to the terms and conditions of insurance policies. The state of Kentucky recognizes bad faith insurance under both common law—the body of law established over time by the courts—and by statute.

Kentucky’s Unfair Claims Settlement Practices Act provides a list of potential bad faith actions that can come up in motor vehicle insurance claims. These include: misrepresenting the factors or insurance policy provisions relating to coverage; failing to act in a reasonably prompt manner with respect to communications under the insured’s policy; refusing to pay claims without having performed a reasonable investigation of the available information. These are just several potential practices that can be targeted in bad faith insurance litigation.

In our next post, we’ll look a bit more at this topic and the importance of experienced legal counsel in pursuing bad faith insurance claims. 

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