What Is The Time for Responding to a Defense Tender?
Insurers must acknowledge an initial claim within 10 days of receipt. R.I. Rev. Stat. § 27-9.1-4.
Insurers must accept or deny coverage within 30 days after receipt of proof of loss. R.I. Rev. Stat. § 27-9.1-4.
Does Reserving Rights Create a Conflict of Interest?
No cases found.
Does a Reservation of Rights Create Additional Duties?
No cases found.
What Must Be Done If A Conflict of Interest Exists?
In the event of a conflict with its insurer, an insured is allowed to refuse appointed defense counsel. Employers Fire Ins. Co. v. Beals, 240 A.2d 397, 404 (R.I. 1968). In such cases, the insurer must approve the independent counsel selected by its policyholder, said approval not to be unreasonably withheld, or may appoint separate counsel to represent its own interests. Employers Fire Ins. Co. v. Beals, 240 A.2d 397, 404 (R.I. 1968).
Who Is Responsible for Fees of Independent Counsel?
The insurer. Employers Fire Ins. Co. v. Beals, 240 A.2d 397, 404 (R.I. 1968).
What Are Independent Counsel’s Obligations?
No cases found.
What Settlement Duties Exist?
An insurer may be found responsible for negligently failing to settle a claim within policy limits in breach of its duty to explore all reasonable settlement offers. Asermely v. Allstate Ins. Co., 728 A.2d 461, 464 (R.I. 1999).
What Actions May Result in a Claim for Bad Faith?
An insured may pursue a statutory bad faith claim against an insurer when a claim is denied without any objectively reasonable basis and where the insurer acts with reckless disregard or knowledge of the wrongness of its position. R.I. Gen. Laws § 9-1-33.
Rhode Island recognizes a cause of action in bad faith sounding in tort for an insurer’s failure to settle a claim. Bibeault v. Hanover Ins. Co., 417 A.2d 313, 319 (R.I. 1980). An insured must show the absence of a reasonable basis for denying benefits of the policy and the insurer’s knowledge or reckless disregard of the lack of a reasonable basis for denying the claim. Bibeault v. Hanover Ins. Co., 417 A.2d 313, 319 (R.I. 1980).
There is no private cause of action for an insured under Rhode Island’s Unfair Claims Settlement Act. R.I. Gen. Laws § 27-9.1-1.
Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?
Under R.I. Gen. Laws § 9-1-33, a successful claimant may recover compensatory damage, punitive damage and reasonable attorney’s fees. R.I. Gen. Laws § 9-1-33.
Are Punitive Damages Recoverable in Insurer-Insured Dispute?
Under R.I. Gen. Laws § 9-1-33, a successful claimant may recover compensatory damage, punitive damage and reasonable attorney’s fees. R.I. Gen. Laws § 9-1-33. These damages are provided by statute with no heightened pleading necessary. Skaling v. Aetna Ins. Co., 799 A.2d 997, 1016 (R.I. 2002) (“Because punitive damages are available as a matter of right in bad faith cases, it is unnecessary to plead or prove willful or wanton conduct by the insurer.”).
Alternative Coverage Options
A declaratory judgment action is often the most expeditious and fairest method of securing a determination as to the contractual duty to defend. Employers Fire Ins. Co. v. Beals, 240 A.2d 397, 404 (R.I. 1968). However, where the coverage issues to address in a declaratory judgment action are inextricably related to the issues determinative of liability, the declaratory judgment action is properly dismissed. Employers Fire Ins. Co. v. Beals, 240 A.2d 397, 404 (R.I. 1968)
Relevant Statutes
Declaratory Judgment – R.I Gen. Laws § 9-30-1.
“The superior or family court upon petition, following such procedure as the court by general or special rules may prescribe, shall 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. 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.”
Bad Faith Statute – R.I. Gen. Laws § 9-1-33.
Unfair Claims Settlement Act – R. I. Gen. Laws § 27-9.1-1.
Consumer Protection Act – R.I. Gen. Laws § 6-13.1-1.