Are Bad Faith Claims Against Liability Insurers Viable in New York?
On December 18, the Daily News reported that Reliastar, a life insurance company, was accused of acting in bad faith for refusing to pay out on its policy insuring actor Heath Ledger. Although Reliastar has held up payment pending the completion of its investigation as to whether his death was caused by suicide, Ledger’s estate contends that since the Medical Examiner’s official report has already ruled that his death was caused by an accidental overdose of prescription medication, Reliastar has no valid basis upon which they can withhold payment. While the term “bad faith” may seem like mere inflammatory rhetoric to some, the truth is that this term has legal significance, because if an insurer is found by a judge or jury to have acted in bad faith, the consequences for the insurer can be severe, such as being assessed punitive damages and attorneys’ fees. So, at what point is an insurer liable for bad faith? Although the answer to this question should be relatively simple, the truth
