Insurance Coverage Update - June 2015
Covered in this post:
- District Court Finds Bad Faith Claim Devoid of Merit
- New Jersey Appellate Division Refuses to Reform Policy Limits When Insured Failed to Inspect Declaration Page
- Court Affirms that New York Does Not Recognize an Independent Tort For The Bad Faith Denial of Coverage
Bad Faith - Life Insurance
District Court Finds Bad Faith Claim Devoid of Merit
Barratt v. Metro. Life Ins. Co., 2015 U.S. Dist. LEXIS 39510 (D.N.J. Mar. 26, 2015)
New Jersey District Court dismisses life insurance policy beneficiary's bad faith claim because her allegation that the insurer improperly refused to make payment on the policy because of a premium payment lapse, even if accepted as true, amounted to nothing more than a "failure to settle a debatable claim."
The claimant's husband in 1986 purchased a $100,000 life insurance policy that included a Spouse Term Rider that provided a $100,000 death benefit to the claimant. In 1991, her husband increased the value of the 1986 policy to $250,000 and converted the policy's spousal coverage to a separate life insurance policy for the claimant in the amount of $100,000. All premiums for the 1991 policy covering the claimant were paid, including after the husband's death in 2009. But payments for the 1986 policy were sporadic and coverage lapsed in 2000 after husband and wife failed to respond to a letter addressing the premium payment shortcoming.
New Jersey Appellate Division Refuses to Reform Policy Limits When Insured Failed to Inspect Declaration Page
Drysten v. Chiesa, 2015 N.J. Super. Unpub. LEXIS 1343 (App. Div. June 8, 2015)
New Jersey Appellate Division rejects husband and wife policyholders' bid to reform their insurance policy's coverage limits because the policyholders failed to fulfill their duty to inspect policy terms and alert the insurer of any discrepancies between the coverage they requested and the coverage they were provided.
The insured was injured in a motor vehicle accident in September 2012. After recovering the $100,000 limit from the policy covering the driver who caused the accident, she and her husband sought underinsured benefits from their insurer, believing that the limits of their uninsured/underinsured motorist coverage were the maximum available -- or, coverage of $500,000 per occurrence and $1,000,000 aggregate. The policyholders brought suit when their insurer advised that the policy's uninsured/underinsured coverage limit was instead $100,000/$300,000.
Bad Faith - Homeowners Coverage
Court Affirms that New York Does Not Recognize an Independent Tort For The Bad Faith Denial of Coverage
Ripka v. Safeco Ins., 2015 U.S. Dist. LEXIS 67595 (N.D.N.Y May 26, 2015)
In an action to recover under a homeowners policy, the court dismisses the policyholders claim alleging violation of insurance regulations, claim alleging violation of N.Y. General Business Law § 349, and claim for recovery of consequential and punitive damages.
The policyholder sought coverage after a plumbing leak caused significant damage to her home. The policyholder timely notified her insurer, but alleged that the insurer did not timely send a contractor to assess the damage, engaged in a series of delay tactics while ultimately deciding not pay the claim.