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Insurance company sued for breach of faith, breach of contract 4

Thu Apr 25th, 2013 on     Bad Faith Insurance,    

This is the last post in our series about a breach of faith insurance claim brought by actor Keith Carradine’s ex-wife, Sandra Will Carradine, against her insurance company. She claims that she contacted her insurance company in 2006 when her ex-husband sued her. The insurer neither accepted nor rejected her claim until 2011, when it finally agreed to provide a defense. She is now suing the insurance company for the money she spent on her own defense during those five years.

The law’s view of good faith can be difficult to grasp. In general, “good faith” covers the parties’ honest commitment to perform their express and implied obligations under the contract. “Bad faith” can be more than the absence of good faith if a party is acting intentionally.

Here, if the insurance policy did not specifically say that the insurer will respond to a claim within, say, 90 days, the plaintiff could argue that the timely processing of a claim was fair and reasonable under community standards and, so, an implied obligation. The five-year delay in responding to the claim could be characterized then as a breach of good faith or a bad faith failure to act.

There is another interesting twist here, though, that we see from the news story but that we have no more information on. Generally, insurance does not cover intentional acts and does not cover wrongful or illegal acts. An extreme example of this would be when a patient accuses her doctor of sexual assault. The doctor’s insurer will likely say that the act was both unlawful and intentional and, therefore, not covered; as such, the insurance company has no duty to defend and no duty to indemnify.

Sandra pleaded guilty to perjury and admitted that she had hired the detective to monitor her ex-husband’s activities. Depending on the particulars of Keith’s complaint, Sandra could be asking for coverage (and coverage includes both defense and indemnity) for illegal or intentional acts. News reports have not addressed that angle, though, and we are reluctant to speculate.

We will, however, keep an eye on the lawsuit.

Source: Courthouse News Service, “Insurer Sued for $400K in Pellicano Case,” April 1, 2013

Our insurance law firm works on cases like the one discussed above. Please visit our website for more information about our Miami, Florida, practice.

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