What Is The Time for Responding to a Defense Tender?
The insurer has 10 days to acknowledge the receipt of a claim. Ohio Admin. Code § 3901-1-54.
An insurer must accept or deny a claim within 21 days of receipt of proof of loss, unless more time is needed, in which case the insurer must notify the insured of that and continue to do so every 45 days until a coverage determination is made. Ohio Admin. Code § 3901-1-54.
Does Reserving Rights Create a Conflict of Interest?
A reservation of rights does not automatically constitute a conflict of interest between the insurer and insured. Red Head Brass, Inc. v. Buckeye Union Ins. Co., 735 N.E.2d 48, 55-56 (9th Dist. Wayne County 1999).
Does a Reservation of Rights Create Additional Duties?
None found.
What Must Be Done If A Conflict of Interest Exists?
When a conflict of interest exists between an insurer and an insured, the insurer must hire independent counsel to represent the insured or allow the insured to select private counsel that the insurer must pay. Socony-Vaccum Oil Co. v. Continental Casualty Company, 59 N.E.2d 199 (1945).
Who Is Responsible for Fees of Independent Counsel?
Insurer. Socony-Vaccum Oil Co. v. Continental Casualty Company, 59 N.E.2d 199 (1945).
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?
An insurer fails to exercise good faith in the processing of a claim of its insured where its refusal to pay the claim is not predicated upon circumstances that furnish reasonable justification therefore. Zoppo v. Homestead Insurance Company, 71 Ohio St. 3d 552 (1994).
Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?
Not automatically, but attorney’s fees may be awarded as an element of compensatory damages where the jury finds that punitive damages are warranted. Zoppo v. Homestead Insurance Company, 71 Ohio St. 3d 552 (1994).
Are Punitive Damages Recoverable in Insurer-Insured Dispute?
Yes. Punitive damages may be recovered against an insurer who breaches his duty of good faith in refusing to pay a claim of its insured upon proof of actual malice, fraud or insult on the part of the insurer. Zoppo v. Homestead Insurance Company, 71 Ohio St. 3d 552 (1994).
Alternative Coverage Options
Ohio courts favor the use of declaratory judgment actions to resolve coverage issues. Preferred Risk Ins. Co. v. Gill, 507 N.E.2d 1118 (Ohio 1987); Ohio Rev. Code § 2721.
An insurer may seek permissive intervention in a claim against the insured for the purpose of crafting special interrogatories to permit apportionment of the damages between covered and non-covered claims. Walsh v. Patitucci, No. 77969 (Ohio App. November 2, 2000).
Relevant Statutes
Declaratory Judgment – Ohio Rev. Code § 2721.
“Courts of record within their respective jurisdictions have the 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 under this chapter. The declaration may be either affirmative or negative in form and effect. The declaration has the force and effect of a final judgment or decree.”
Although Ohio has enacted an unfair insurance practices statute the statute creates no private cause of action. Strack v. Westfield Cos., 33 Ohio App. 3d 336, 338, 515 N.E.2d 1005, 1008 (1986); see also Ohio Admin. Code § 3901-1-07.