What Is The Time for Responding to a Defense Tender?
An insurer my acknowledge and act reasonably promptly upon communications with respect to claims. Mont. Code § 33-18-201.
An insurer shall pay or deny a claim within 30 days after receiving proof of loss. Mont. Code § 33-18-201.
Does Reserving Rights Create a Conflict of Interest?
Yes; a potential conflict of interest exists when an insurer defends under a reservation of rights. In the Matter of the Rules of Professional Conduct and Insurer Billing Rules and Procedures, 2 P.3d 806, 813 (Mont. 2000).
Does a Reservation of Rights Create Additional Duties?
The insured is the sole client of defense counsel, whether there is a present conflict of interest between the insured and the insurer’s interests or not. In the Matter of the Rules of Professional Conduct and Insurer Billing Rules and Procedures, 2 P.3d 806, 815 (Mont. 2000).
What Must Be Done If A Conflict of Interest Exists?
An attorney defending a case is operating independently from insurer and owes a duty of loyalty to only the insured; therefore no need for appointment of another attorney. Peterson v. St. Paul Fire and Marine Ins. Co., 239 P.3d 904, 910 (Mont. 2010).
Who Is Responsible for Fees of Independent Counsel?
The insurer, although the insured selects counsel. St. Paul Fire & Marine Ins. Co. v. Thompson, 433 P.2d 795, 799 (Mont. 1967).
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?
Montana maintains a statutory cause of action for bad faith under its unfair claims settlement practices act, including an independent cause of action against an insurer if it engages in the following practices: misrepresenting pertinent facts or insurance policy provisions relating to coverages at issue; refusing to pay claims without conducting a reasonable investigation based upon all available information; failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed; neglecting to attempt in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear; attempting to settle claims on the basis of an application that was altered without notice to or knowledge or consent of the insured; and failing to promptly settle claims, if liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage. Mont. Code § 33-18-242; Mont. Code § 33-18-201 (1), (4-6), (9), and (13).
Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?
Attorney fees are generally not recoverable, as they are not provided for in the statute. Sampson v. Nat’l Farmers Union Prop & Cas. Co., 144 P.3d 797, 801-802 (Mont. 2006).
Are Punitive Damages Recoverable in Insurer-Insured Dispute?
Yes; Mont. Code § 33-18-242(4) authorizes recovery of exemplary damages in accordance with Mont. Code § 27-1-221. To recover, the insured must prove actual fraud or actual malice by clear and convincing evidence. Mont. Code § 27-1-221(1) and (5).
Alternative Coverage Options
If an insurer wishes to dispute coverage, it must defend under a reservation of rights and later seek a judicial determination of coverage in a declaratory judgment action. Farmers Union Mut. Ins. Co. v. Staples, 90 P.3d 381, 386 (Mont. 2005).
Declaratory Judgment – Mont. Code § 27-8-201
“Courts of record within their respective jurisdictions shall have power to 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, and such declarations shall have the force and effect of a final judgment or decree.”
Unfair Claims Settlement Practices Act – Mont. Code §33-18-201.
No Independent Cause of Action for Insurance Bad Faith – Mont. Code § 33-18-242(3) prohibits an insured from bringing an action for bad faith in connection with the handling of an insurance claim.
Punitive Damages Statute – Mont. Code § 27-1-221(1) and (5).