In the course of doing business, insurers inevitably confront claims from policyholders that include allegations of bad faith or other unfair business practices. These extracontractual claims pose a unique set of risks to insurers. They implicate insurer integrity and expose underwriters to potentially sizable punitive damages. In addition, payment of extracontractual awards cuts directly into corporate profits. In order to protect both reputation and revenue, insurers need attorneys with deep and specific experience resolving alleged bad faith and extracontractual disputes.
Cozen O’Connor represents insurance clients in jurisdictions throughout the U.S. against statutory and common law first- and third-party extracontractual claims for actual and consequential damages, penalties, punitive and exemplary damages, attorneys’ fees and costs, and coverage payments. We have handled extracontractual disputes and bad faith claims with regard to property policies, general liability policies, professional liability policies, life, health and disability policies, consent judgment actions, uninsured or under-insured motorist coverage, and garnishment actions. Whether bad faith claims are addenda to a broader coverage matter or are central to the complaint, Cozen O’Connor attorneys know how to efficiently respond to extracontractual causes of action.
Our firm has the distinct advantage of being a global leader in the area of insurance coverage and claims litigation. This is critical because in the vast majority of states, plaintiffs must demonstrate a breach of contract in order to file a bad faith or unfair practices claim. Because Cozen O’Connor has such a sophisticated understanding of insurance contracts and coverage laws, we are often able to defeat breach of contract assertions at the outset, thereby mitigating any extracontractual claims.
We also have a successful track record of achieving quick and quiet resolutions in negotiations around extracontractual claims. These cases are qualitatively different from other coverage disputes because they involve questions of honor, duty, and essential fairness – and Cozen O’Connor attorneys understand they must be approached with great sensitivity. Our lawyers are able to dispassionately analyze the facts, create a rational framework for discussion, incentivize reasonable conduct and mutuality, and find solutions that limit insurer exposure. With regard to extracontractual claims, our goal is to protect both the bottom line and the brand.
SERVICE AREAS
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Defeat or minimize extracontractual exposure
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Respond to policy limit and time limit demands
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Prepare reservations of rights or denials of coverage letters
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Assist in the withdrawal of a defense while avoiding waiver/estoppel claims
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Defend bad faith claims arising from an excess underlying verdict
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Respond to unreasonable bad faith discovery requests and consent judgments
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Bifurcate bad faith claims for discovery and trial
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Avoid or limit impact of policyholder’s assignment of rights
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Avoid or defend against collusive settlements
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Negotiate settlements in cases with multiple insureds/claimants, multiple insurers, limited insurance, and coverage and bad faith arguments or exposure