Bad Faith: River Farm Realty Trust v Farm Family Casualty Insurance Co.

The Federal District Court of Massachusetts ruled in River Farm Realty Trust v. Farm Family Casualty Ins. Co., that an insurer acted in good faith in its adjustment of a homeowner’s ice dam claims. The court determined that the insurer paid everything that it was contractually entitled to after an adjustment dispute resulted in Reference proceedings.

The court found the insurer acted carelessly in processing the Plaintiff’s claim but recognized they did select an adjuster in good faith and timely responded to all claim correspondence. The court declined to find this conduct satisfied the “extreme or egregious business” standard of Chapter 93A. The court found no evidence the insurer failed to participate in the Reference once the Plaintiff invoked their rights under the policy and once the award was final the insurer promptly paid.

The District Court affirmed the long standing principal that an insurer is not required to offer a fair and reasonable settlement until liability and damage are apparent. Careless error during the processing of a claim does not satisfy the standard of 93A when all other facts point to prompt payment under the terms of policy.