July 23, 2018 Practice Points

Dealing with Claimant Requests for Information on Other Sources of Recovery

If an insurer fails to notify its insured about requests for information and that failure causes a settlement opportunity to be lost, the insurer may be liable for any resulting excess judgment

by William Barker

Even when the insurer offers its policy limits, claimants often wish to verify the lack of other sources of recovery before agreeing to give a release. This may involve inquiries about such things as other insurance, whether the insured was acting in the course of some employment or agency, and/or other assets that might be subject to execution. If the insurer fails to notify its insured about such requests and that failure causes a settlement opportunity to be lost, the insurer may be liable for any resulting excess judgment. Badillo v. Mid Century Ins. Co., 2005 OK 48, ¶¶ 31-32; The insurer’s duty may include providing “reasonable information concerning the statement request and settlement implications thereof in order for [the insured] to have necessary input concerning the request so that an informed decision as to how best to respond could be formulated.” Id. ¶ 31.

Requests for information from an insured can be difficult to satisfy, especially if the insured is unresponsive or uncooperative. Given the consequences of failure, insurers would be well advised to go one or more extra miles in making such efforts.  The insurer did that in Hinson v. Titan Insurance Co. 127 F. Supp. 2d 1249 (N.D. Fla. 2015), and was rewarded by rejection of the failure to settle claim.

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