Tort Law

This page within Virginia Tort Case Law is a compilation of cases reported by the Virginia Supreme Court and summarized by Brien Roche dealing with the topic of Insurance Bad Faith and the related topic of personal injury.  For more information about bad faith see the pages on Wikipedia.

Insurance Bad Faith-Statutes

See Va. Code § 8.01-66, which provides remedy for insured who is denied right to comparable substitute vehicle in bad faith. 

See Va. Code § 8.01-66.1 as to arbitrary refusal to settle. 

Insurance Bad Faith-Cases

2000 Nationwide Mut. Ins. Co. v. St. John, 259 Va. 71, 524 S.E.2d 649. 

Va. Code § 38.2-209 allows insured to recover cost and reasonable attorney’s fees in declaratory action if trial court determines that insurer was not acting in good faith. Under Va. Code § 8.01-66.1A, the insured’s evidentiary burden is preponderance of evidence standard. In this case, 12-year-old boy injured in auto accident treated by family physician for some injuries and examined by chiropractor who diagnosed muscle tear or nerve compression. The chiropractor treated boy three times a week and then two times a week for four weeks. Insurer’s reviewing expert testified that treating chiropractor had not kept good records. Jury returned verdict in favor of patient for amount of unpaid balance. Trial court determined that insurer’s refusal was not made in good faith and entered judgment for twice the unpaid expenses plus attorney’s fees. Judgment affirmed on appeal. 

1995 Levine v. Selective Ins. Co., 250 Va. 282, 462 S.E.2d 81. 

Plaintiff signed contract with Elmore for construction of home and Elmore obtained insurance contract to provide coverage for loss of materials and personal injuries on jobsite. It was agreed that plaintiffs were beneficiaries of such policy. Carrier delayed in payment of claim. Plaintiff presented jury issue as to breach of contractual duty of good faith and fair dealing. 

1995 Allstate Ins. v. United Servs. Auto Ass’n, 249 Va. 9, 452 S.E.2d 859. 

Wrongful death action where both carriers had overlapping excess coverage. USAA had primary coverage plus excess. USAA settled by paying their primary limits plus a portion of excess and then demanded fifty percent contribution from Allstate as to excess. Allstate defended by saying its obligation to pay was triggered by its agreement or final judgment. Neither was obtained in this instance and as such there was no obligation on their part to contribute. Although insurer may have good faith obligation to settle action within the policy limits, that obligation does not appear to extend to other carrier. 

1990 Scottsdale Ins. Co. v. Glick, 240 Va. 283, 397 S.E.2d 105.

Insurance bad faith.Virginia Code § 38.2-209(a) allows recovery of costs and attorney fees in coverage dispute if carrier did not act in good faith. In determining bad faith, court must apply reasonableness standard: (1) interpretation of policy; (2) investigation; (3) evidence supporting denial of coverage; denial used as tool in settlement; and (4) defense raised issue of first impression or one reasonably debatable In this case, no bad faith. 

1989 CUNA Mut. Ins. v. Norman, 237 Va. 33, 375 S.E.2d 724. 

Insurance bad faith.Court is applying Va. Code § 38.2-209 to determine whether award of attorney’s fees is appropriate against carrier for denying coverage. Bad faith requires analysis of following: (1) can reasonable minds differ on issue of coverage; (2) was reasonable investigation undertaken; (3) did evidence discovered justify denial of liability; (4) was insurer’s refusal to pay used merely as tool in settlement negotiations; (5) does issue raised by carrier raise question of first impression or one that is reasonably debatable. 

1988 State Farm v. Floyd, 235 Va. 136, 366 S.E.2d 93. 

Insurance bad faith.Insured may recover from insurer for judgment in excess of policy limits where failure to settle within policy limits is result of bad faith. Insured must show that insurer acted in furtherance of its own interest with intentional disregard of financial interest of insured. Bad faith must be proved by clear and convincing evidence. 

1986 Horace Mann Ins. Co. v. Government Emps. Ins. Co., 231 Va. 426, 344 S.E.2d 906. 

Insurance bad faith may arise when insurer unjustifiably refuses to settle claim within limits thereby exposing insured to excess liability. No bad faith in this primary-secondary insurer situation since both carriers made informed business judgment to contribute to settlement. 

1983 Reisen v. Aetna Life & Cas. Co., 225 Va. 327, 302 S.E.2d 529. 

Insurance bad faith.Demand for settlement by plaintiff in this tort action was in excess of policy limits. Firm offer for settlement within policy limits made by carrier. As result, insurer had duty to exercise good faith in dealing with offer of compromise, keeping in mind insured’s interest and its own. Existence of this good faith duty depended entirely on whether or not there was coverage under policy. If in fact there was no coverage, then there was no duty. 

1981 Nicely v. Bank of Va. Trust Co., 221 Va. 1084, 277 S.E.2d 209. 

Claim by employee under profit sharing and disability retirement plan. Court will not interfere with administrator’s denial of benefits without clear and convincing evidence of bad faith, fraud, mistake or arbitrary action. 

1966 Aetna v. Price, 206 Va. 749, 146 S.E.2d 220.

Insurance bad faith.In proper case insurance company may be liable for excess verdict if refusal or failure to settle is marked by bad faith. Mere refusal of insurance company to accept advice of counsel to settle does not constitute bad faith.