Holcomb Dunbar Mississippi Insurance Law – Part 2 – Holcomb Dunbar

MISSISSIPPI Insurance-Related Law  — An A to Z Guide Here’s the next post sharing our 2016 update.  If you like a full copy or have any questions, please email or call. Bad Faith   Punitive damages are available to the insured in addition to the amount of the claim in some cases when the insurance company wrongfully refuses to pay a claim.  The jury may consider these damages only when the evidence has established that the insurer acted with (a) malice or (b) gross negligence or reckless disregard for the rights of others.  Scott v Transport Indemnity Co., 513 So. 2d 889 (Miss. 1987).  See also, Miss. Code Ann. § 11-1-65, regarding punitive damages.   If the insurer has a “legitimate or arguable reason” for denying the claim, the insurer cannot be liable for bad faith. Jenkins v. Ohio Cas. Ins. Co., 794 So. 2d 228 (Miss. 2001).  It is important to document all support and explanation for denying or delaying a claim.  See also Negligent Investigation.   Excess Verdicts – Settlement within Policy Limits   When a suit covered by a liability insurer is for an amount in excess of the policy limits, and an offer of settlement is made within the policy limits, the insurer has a fiduciary duty to look after the insured’s interest to the same extent as its own, and also to make a knowledgeable, honest and intelligent evaluation of the claim in consideration with its ability to do so.  A failure to do this may subject the carrier to all damages, even in excess of the policy.  Hartford Acc.& Indem. Co. v. Foster, 528 So. 2d 255, 265 (Miss. 1988).   Extra-contractual damages – Mistake or Clerical Errors   A carrier can be liable for certain expenses incurred by an insured even if the conduct falls short of bad faith or punitive conduct.  If an insurer’s failure to pay a claim was the result of a mistake or clerical error, the insurer may be liable for extra-contractual damages caused by anxiety resulting from the delay in payment.  Additional expenses including attorney’s fees which are reasonably incurred in an effort to correct the mistake may also be recovered. These kinds of damages are often referred to as “Veasley damages” after the case that created the rule.  Universal Life Ins. Co. v. Veasley, 610 So. 2d 290, 295-96 (Miss. 1992).   Negligent Investigation   An insurer has a duty to perform an adequate and prompt investigation of an insurance claim.  The denial of a claim without the proper investigation may give rise to punitive damages.  Gilbert v. Infinity Ins. Co., 769 So. 2d 266, 269 (Miss. App. 2000) (citing Bankers Life & Casualty Company v. Crenshaw, 483 So. 2d 254, 276 (Miss. 1985)).   “Obviously, some delay in evaluating claims is inevitable, legitimate and socially useful. Insurers are entitled, and in fact legally obligated, to investigate fully the legitimacy of claims, and some skepticism in evaluating claims is appropriate. Since an insurer has an obligation under Mississippi law to investigate claims, discharging that duty is not bad faith. However, an inadequate investigation of a claim may create a jury question on the issue of bad faith.”  Pilate v. American Federated Ins. Co., 865 So. 2d 387 (Miss. App. 2004) (quoting Jeffrey Jackson,  Mississippi Insurance Law § 12:5 (2001)).   At a minimum, the insurer must determine whether the policy provision at issue has been voided by state or federal court, interview its agents and employees to see if they have knowledge relevant to the claim, and make a reasonable effort to secure all relevant medical records before denying the claim.  Eichenseer v. Reserve Life Insurance Co., 682 F.Supp 1355, 1366 (N.D. Miss. 1988).   See also Delay of Payment of Claim   Delay of Payment of Claim   Although Mississippi courts are skeptical of such claims, they have permitted claimants to recover damages on bad faith claims when resolution of an insurance claim is merely delayed rather than ultimately denied.  See, e.g., Travelers Indem. Co. v. Wetherbee, 368 So. 2d 829, 834–35 (Miss. 1979) (affirming jury award for punitive damages where insurer withheld payment for eight months); AmFed Cos., LLC v. Jordan, 34 So. 3d 1177, 1191 (Miss. App. 2009) (affirming trial judge’s decision to submit punitive damages issue to the jury in a delay-of-payment case); Pilate v. Am. Federated Ins. Co., 865 So. 2d 387, 400 (Miss. App. 2004) (“[T]here may be cases where a delay [of payment for one month] could possibly be sufficient grounds for a bad faith claim.”); see also Essinger v. Liberty Mut. Fire Ins. Co., 529 F.3d 264, 271 n.1 (5th Cir. 2008) (citation omitted) (“Inordinate delays in processing claims and a failure to make a meaningful investigation have combined to create a jury question on bad faith.”); but see Tutor v. Ranger Ins. Co., 804 F.2d 1395, 1399 (5th Cir. 1986) (per curiam) (reversing jury’s punitive damage award where payment was delayed during an ongoing dispute between insured and insurer); Caldwell v. Alfa Ins. Co., 686 So.2d 1092, 1098 (Miss. 1996)(affirming

Source: Holcomb Dunbar Mississippi Insurance Law – Part 2 – Holcomb Dunbar

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