Bad Faith: Summit Insurance Co. v. Stricklett et al.

Rhode Island Bad Faith Update:

Last month in Summit Insurance Company v. Eric Stricklett, No. 2017-185-Appeal. (PC 12-5368) (Jan. 15, 2019; corr Feb. 5, 2019), the Rhode Island Supreme Court stated: “this Court has never recognized such a duty and has never held that an insurer has extracontractual liability to a third-party claimant in addition to a contractual, fiduciary duty to its insured for failing to settle a claim in a timely manner where § 27-7-2.2 was not applicable. … because we hold that Summit [insurer] owed no duty to Alves [claimants], we determined that the trial justices’ conclusion that ‘Summit does owe a duty to the Alves[es] to act in a reasonable manner and in good faith in settling the claim against Mr. Stricklett . . . was not correct.”

The Court refused to extend the insurer’s obligation to the third-party claimant, stating “We believe that this kind of duty on the part of the insurance company to third parties would expand an insurance company’s potential liability under Asermely too far and essentially announce a new, judicially-created cause of action.”