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Articles Posted in Bad Faith Insurance


When a policy contains a “cost of making good provision,” is an insurer able to wholly deny coverage falling under its purview, even if it just applies to a small part of the claim? This question was recently brought to the Central District Court of California in The Haven at Ventura, LLC v. General Security Indemnity Company of Arizona, et al. In this case the Plaintiff, Ventura, brought suit against the Defendant, General Security, alleging an improper denial of benefits under a $69 million “builders risk policy.” The underlying circumstances giving rise to a claim for coverage in this action began in September of 2020, and concern mold damage to new, incomplete buildings on the Plaintiff’s property. After expert evaluation, it was determined that the buildings needed “detailed remediation,” a request for the cost of repairs subsequently filed with the Plaintiff’s insurer. During this period, the correction of the damage sustained caused the opening of the residential property to be delayed, thus resulting in additional financial damages to the Plaintiff. The claims brought by the Plaintiff under the builders risk policy included “faulty workmanship” and “excluded dampness of atmosphere.” Coverage was subsequently denied by the named Defendant and several other involved insurance providers.

The Plaintiff states that multiple attempts were made to avoid the process of litigation, but upon the inability to come to an agreement, they felt it necessary to file suit. The Plaintiff brought their claim against the Defendants for breach of contract and is asking the Court for upwards of $5 million as a result of the loss of income from their inability to collect rent during the period that the damaged buildings were undergoing repairs. An interesting aspect of this litigation is the novelty of the “cost of making good provision” at issue in the policy, as it is not yet as common in the United States as in foreign courts in Europe and Canada. This kind of provision essentially requires the insurer to cover the costs of making a covered property “good” or in other words, back to its original condition after damage as occurred. The Plaintiff’s argument relies on the intent and purpose of such a provision, and states that a complete denial of coverage is in opposition with the intended results of its inclusion in the policy. The Plaintiff further argues that in order to determine how the “make good” provision should be interpreted the Court should look to the example set by countries that have applied them for decades. The Plaintiff asserts that under this method of interpretation, their argument that the “make good” provision did not apply to the entirety of the claim and thus cannot be relied upon to deny the claim in full must prevail.

Counsel for the Plaintiff states that an argument blaming “damp atmosphere” for the mold damage is not based on adequate evidence, and thus the Defendants’ assertion that this was the underlying cause of the mold damage is incorrect. Further, the Plaintiff contends that the relevant provision applies to damages from “faulty workmanship” taking place directly adjacent to a loss, and not the kind of damages at issue in this circumstance, therefore the Defendant’s justification for denial under the “make good” provision is invalid. The Defendants have not yet responded to the allegations, though the next steps in this case will undoubtedly be cause for attention due to the novelty of the provision at issue.

Health insurance companies are supposed to protect their policyholders by providing financial protection and reimbursement against losses. They collect premiums from their clients over a period of time to pay for future losses. When a person buys an insurance policy, they are entering into a contract. This contract is expected to be upheld and followed even when unexpected accidents and expenses occur. There are laws set in place to help and protect policyholders from health insurance companies when they wrongfully deny coverage to their insured. Read on to find out how you can identify the signs of wrongful treatment and how to protect yourself.

What Should Health Insurance Companies Cover

This list does not include all the possible items and instances of coverage. To see a full list of items that should be covered by your insurance company, take a further look into the details of your health insurance policy. The list below includes major services that should be covered under basic policies:


The cases below, while all turning a year older this week, are still relied upon to defend insured members whose claims are handled unfairly by their insurance companies.

November 17, 1988

State Farm Mut. Auto. Ins. Co. v. Reeder, 763 S.W.2d 116 (Ky. 1988). Twenty-one years ago this month, the Kentucky Supreme Court dramatically leveled the playing field against insurance companies by their decision in this case. In this case, Reeder lived next door to the Hamptons, whose teenage son accidentally drove his car into the support for Reeder’s car port, which then collapsed. Reeder estimated the damages were $13,000, but Hampton’s insurance carrier, State Farm, refused to pay. Reeder, unsatisfied with State Farm’s offer, sued them to collect the full amount, for his attorneys’ fees and for punitive damages for violating the Unfair Claims Settlement Practices Act law.


HAPPY BIRTHDAY to the Unfair Claims Settlement Practices Act! Thirty-five years ago today, our Kentucky state legislators met and voted UNANIMOUSLY to pass the Unfair Claims Settlement Practices Act.

This law leveled the playing field for all citizens of the state against insurance company claim practices.  No longer could insurance companies leverage the unequal bargaining position they had against someone financially distressed because a terrible event had occurred in their life. No longer could insurance companies take advantage of the immediate need for money that stems from accidents, deaths, disability and life‘s tragedies! It put an end to insurance companies delaying claims unreasonably until they can save money.

The fight continues at Mehr Fairbanks Trial Lawyers to enforce these laws and to stop insurance claim abuses. There continues to be inappropriate motivations and lack of training of claims personnel to, first and foremost, be fair and prompt in claim payments.


While finalizing the purchase of a home, it is important to get as much information about the offer as possible. This includes insurance coverage, what is included in the acquisition, and what the buyer is accountable for with the house. If the realty agent, broker or loan provider lied or misled the buyers, this could result in a civil suit against the company or the individual.

If you or anyone you know in Lexington believe to have been duped in the purchase of the property, one of the best options you may get is our Lexington insurance attorneys at Mehr Fairbanks Trial Lawyers.

Can I Sue My Realtor For Not Being Honest?


When somebody acquires a home, it is recommended to likewise obtain a comprehensive insurance policy for a myriad of protections. A policy could shield from fires, floods, theft, as well as comparable concerns. Nevertheless, it is critical to know what sorts of security are not provided in these types of coverage too.

If there is a requirement for additional insurance, it should be bought, yet the policy has to be understood, or it is feasible, to get an insurance provider where gaps may exist such as smoke or fire damages or theft of just particular goods. Standard insurance coverage might not be suitable for particular areas around the USA.

The standard policy that a new homeowner purchases usually covers whatever he or she may think about, however, this is not always sufficient based on what may go wrong. The theft policy may only cover small products such as radios, books, as well as digital gizmos, but the larger purchases may be exempt from this policy. Vandalism generally covers any type of damage, however, if theft is not part of the deed, anything stolen may not be compensated. Weather condition may include fire, wind, lightning, and similar problems, yet it may not cover flooded areas with extensive rains. And also, there are times when other issues occur that the homeowners may not have thought can happen in his or her place.


An insurance policy is a contract between the policyholder and the insurance company. Every insurance policy includes an “implied covenant of good faith and fair dealing,” which requires that the insurance company act in good faith toward the policyholder. When an insurance company violates this covenant by acting in bad faith toward a policyholder, the policyholder may have the right to file a lawsuit against the insurance company that includes both tort (personal injury) and contract claims due to Insurance Bad Faith.

Bad faith is broadly defined as dishonest dealing. Examples of bad faith practices by insurance companies include:

  • Denying payments without a reasonable basis
  • Discounting payments without a reasonable basis
  • Delaying payments without a reasonable basis
  • Failing to affirm or deny coverage of claims within a reasonable time
  • Failing to conduct proper, prompt, and thorough investigations into claims
  • Making burdensome requests for documentation
  • Misrepresenting the law or policy language

Why is bad faith insurance important?


On March 30, 2017, a case from the Western District of Kentucky concluded Kentucky’s highest court would likely hold agreements that assign settlement proceeds from lawsuits are in violation of “Kentucky public policy and the statute proscribing champerty[.]” Boling v. Prospect Funding Holdings, LLC, 2017 U.S. Dist. LEXIS 48098, at *12 (W.D. Ky. March 30, 2017).

Christopher Boling, the Plaintiff in the case who suffered burn injuries from a gas can, sued a manufacturer. Mr. Boling then entered into various agreements with two companies (Prospect Funding Holdings, LLC (“Prospect”) and Cambridge Management Group, LLC) in which, in exchange for the borrowed money, he promised payment to the companies based on a “prospective recovery” from his lawsuit against the manufacturer. Boling later filed suit against Prospect, asking the Court to declare that he was not required by law to repay the monies he borrowed. As noted above, Judge Stivers held the Agreements were void. Judge Stivers also opined the interest charged by Prospect on the money advanced to Mr. Boling violates KRS 360.010(1), Kentucky’s usury law. Mr. Boling was not required to make payment under the Agreements.

You can read Judge Stivers’ opinion addressing the above information as well as other issues here.


In Kentucky, an insurance company is not the only party that can be sued for its involvement in insurance bad faith. In fact, insurance adjusters can also be sued for their liability in practicing insurance bad faith. Two Kentucky circuit courts have refused to dismiss allegations made against insurance adjusters. The defendants in both cases attempted to rely on Davidson v. American Freightways, Inc., 25 S.W.3d 94 (Ky. 2000), to have the claims against the adjusters dismissed. However, Judge Daugherty of Jessamine Circuit Court’s Division I ruled that “claims adjusters fall under the category of agents engaged in the business of insurance” so the claims against the adjuster were proper. See Marsh, et al. v. Starns, et al., Civil Action No. 17-CI-00042 (Jessamine Cir. Ct., Mar. 27, 2017). Fayette Circuit Court also previously refused to dismiss claims against an insurance adjuster.



On January 31, 2017, Honorable Thomas D. Wingate, Franklin Circuit Court’s Division II Judge, granted Plaintiff Lisa Warren’s motion for partial summary judgment and denied Defendant Auto-Owners’ motion for summary judgment. The Court held that Ms. Warren had satisfied the first prong of the test for a first-party bad faith claim as required in Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky. 1993) by proving the insurance company was obligated to pay her claim under the terms of her insurance policy. The Court disagreed with Auto-Owners’ argument that an insurer’s “obligation to pay its policyholders’ claims only arises once all judicial remedies it chooses to pursue have been exhausted[.]” Instead, the Court held that such an interpretation of the Wittmer test “confounds the concepts of contractual obligations of an insurer and the insured[.]” Warren v. Auto-Owners Insurance Company, Civil Action No. 09-CI-910, at *5 (Franklin Cir. Ct., Jan. 31, 2017).

An insurance company cannot use litigation as a tactic to prevent its obligation to pay under a claim of insurance bad faith.

Click here to read Judge Wingate’s full opinion.

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