I hate when insurance companies are accused of acting in “bad faith”. Most people who say that have no idea what they are saying or writing. They are just upset about the results of an insurance investigation. It is the failure to act in the utmost good faith and fair dealing that historically exposes an insurer to non-contractual damages. It does not mean that the insurer was “evil” or “bad”. The Act did consumers a disservice when it called these actions “bad faith” causes of action.
However, a recent case in Indiana seems to indicate that “evil”
; intent is required in the first-party context.1 The most recent decision in Indiana stated the following:“Best Inn argues that Doyle had no rational, principled basis to deny his claim because the evidence of vandalism to the roof air conditioners was ‘obvious.'” Doyle admits that he did not take enough pictures, did not record enough details and generally made a bad job on roof air conditioner inspection Doyle also testified that he “had a bad day,” his inspection was “probably” affected by his eye injury, and that he had made a “mistake,” Doyle’s testimony reflects that he may have acted negligently, but not with dishonest purpose or malice. No reasonable jury could conclude otherwise.”
Having a “bad day” will be the excuse for the failure to act in good faith as long as the bad reasoning in this case is maintained. Failure to properly adjust a claim and cause non-contractual damages to an Indiana policyholder will be met with the legal excuse of someone “having a bad day.”
The case is full of bad facts that lead to this unfortunate legal reasoning that will invite Indiana insurance companies to act badly and not in good faith – yet escape liability for doing so. Just call it a “bad day at the office,” resulting in an arbitrary, devastating outcome for the policyholder, and one can escape liability for the duty of utmost good faith.
This is poor legal reasoning. Most crooks had a “bad day” when they did something criminal. If it is not a defense to criminal conduct, why would it be a defense to civil wrongdoing?
Today’s thought
I believe that unarmed truth and unconditional love will have the last word in reality. That is why the Right, temporarily defeated, is stronger than the evil that triumphs.
– Martin Luther King, Jr.
1 Ohio Security Ins. Co. v. Best Inn MidwestNo. 1:22-cv-o1223 (SD Ind. Mar. 13, 2023).
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