Posted On: July 3, 2007, 6:24 pm CDT

Posted By: Farful McTavish

Woodchuk,

Bad Faith comes into play when the insurance company puts its own interests ahead of the interests of the insured. Here there was a 1M policy. The carrier was faced with a clear liability situation and potential damages beyond the 1M policy. The correct course of action would be to offer the 1M policy to protect the insureds interests. If they had done so there would be no bad faith exposure. The plaintiff would have likley settled for the policy limit and there would be no excess exposure. It if was offered, and the verdict was higher than the policy limit and the plaintiff didn't accept and got a big verdict there would be no bad faith exposure to the carrier because they discharged their obligations. Instead they put in what I call the "hope" defense. They "Hope " that a jury ,despite the facts, would be stingy and screw the plaintiff by awarding less than 1 M. Here, the jury was astute and awarded the full value of the case (75M) leaving its insured exposed for the excess-- it was a good expensive education not to be too arroagant and so cavailer with the insureds interests