What Is The Time for Responding to a Defense Tender?
Insurers must acknowledge and act reasonably promptly upon notice of claim. Me. Rev. Stat. Ann. tit. 24-A, § 2164-D(3)(B). There are no regulations, statutes or case law further defining “reasonably promptly.”
Insurers must affirm or deny coverage, reserving any defenses, within a reasonable time after completing their investigations. Me. Rev. Stat. Ann. tit. 24-A, § 2164-D(3)(F). There are no regulations, statutes or case law further defining “a reasonable time.”
Does Reserving Rights Create a Conflict of Interest?
An insurer which reserves its rights cannot control the defense of a lawsuit brought against its insured by an injured party. Travelers Indemnity Co. v. Dingwell, et al, 884 F.2d 629, 638-39 (1st Cir. 1989).
Does a Reservation of Rights Create Additional Duties?
None found.
What Must Be Done If A Conflict of Interest Exists?
Where an insurer’s obligation to defend leads to a serious dilemma for the insurer, the parties may agree that the insurer will hire an independent counsel. Travelers Indemnity Co. v. Dingwell, 414 A.2d 220 (Me. 1980).
Who Is Responsible for Fees of Independent Counsel?
The insurer. Travelers Indemnity Co. v. Dingwell, 414 A.2d 220 (Me. 1980).
What Are Independent Counsel’s Obligations?
No cases found.
What Settlement Duties Exist?
No cases found.
What Actions May Result in a Claim for Bad Faith?
Statute: The Unfair Claims Settlement Practices statute, Me. Rev. Stat. Ann. tit. 24-A, §§ 2436 and 2436-A provides for private rights of action in favor of an insured for instances of improper actions by an insurer.
A knowing misrepresentation is actionable under the Unfair Claims Settlement Practices statute, if an insured can show more than a mere dispute as to policy language, and must show that while the insurer meant one thing, it told the insured something else. Curtis v. Allstate Ins. Co., 787 A.2d 760, 768–69 (Me. 2002).
Breach of implied convenient of good faith and fair dealing: An insurer has an implied duty to act fairly and in good faith and an insured may pursue a breach of contract claim sounding in bad faith. Linscott v. State Farm Mut. Auto Ins. Co., 368 A.2d 1161, 1163 (Me.1977).
Third-Parties have no right to assert bad faith claims. Linscott v. State Farm Mut. Auto Ins. Co., 368 A.2d 1161, 1163-1164 (Me.1977).
Maine does not recognize a first party cause of action in tort for bad faith. Marquis v. Farm Family Mut. Ins. Co., 628 A.2d 644, 652 (Me. 1993).
Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?
The Unfair Claims Settlement Practices statute, Me. Rev. Stat. Ann. tit. 24-A, §§ 2436 and 2436-A provides for statutory interest and attorneys’ fees in instances of improper actions by an insurer.
Are Punitive Damages Recoverable in Insurer-Insured Dispute?
If an insured can prove that its insurer’s conduct rose to a level of extreme and outrageous conduct, it may sue its insurer for the tort of intentional infliction of emotional distress, and recover punitive damages. This tort recovery must be based on actions separable from the actual breach of contract and independent from the insurer’s denial. Colford v. Chubb Life Ins. Co. of America, 687 A.2d 609, 616 (Me. 1996).
Alternative Coverage Options
An insurer may seek a declaratory judgment as to insurance coverage issues, but such a judgment should not be entered if there are factual disputes at issue in the underlying action. Am. Policyholders’ Ins. Co. v. Cumberland Cold Storage Co., 373 A.2d 247, 250,251 (Me. 1977).
Maine Courts have refused to permit an insurer to intervene in the case against its insured to resolve questions of coverage. Donna C. v. Kalamaras, 485 A.2d 222, 223 (Me. 1984).
Relevant Statutes
Declaratory Judgment – Me. Rev. Stat. Ann. tit. 14, § 5953.
“Courts of record within their respective jurisdictions may declare rights, status, and other legal relations whether or not further relief is or could be claimed. No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for. The declaration may be either affirmative or negative in form and effect. Such declarations shall have the force and effect of a final judgment or decree.”
Unfair Claims Settlement Practices statute – Me. Rev. Stat. Ann. tit. 24-A, §§ 2436 and 2436-A (see above).