Failure to Settle a Reasonable Claim as a Basis for Insurance Company Liability

One type of insurance bad faith is third-party bad faith.  That occurs when your insurance company fails to protect you from legal claims asserted by someone else (the “third-party”) and exposes you to a lawsuit.  Insurance companies have a duty to consider reasonable settlement of claims.  If your insurance company fails to do so, the result could be a lawsuit against you that leads to a judgment greater than your insurance policy limits, which means that you will have to pay some of it personally.  That of course can have devastating financial consequences for you.  It can also result in liens against your property and other collection actions against you, which can cause long-term damage to your credit rating. 

You may have legal rights against your insurer if this happens because the insurance company fails to consider a reasonable settlement of the claims against you.  Your claim can include the extra amount of the judgment over your policy limits and punitive damages.

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Chinese Drywall

There has been a tremendous amount of news lately about Chinese drywall, which, as the name suggests, is drywall that was manufactured in and imported to the United States from China.  Investigations have confirmed that drywall imported from China during the recent housing boom can emit fumes that can make people sick and damage homes. The United States turned to China as a source for drywall after 2000 when the housing boom created domestic shortfalls in supply.

Chinese drywall can be harmful because it emits harmful sulfur gases, corrodes copper wiring, damages furnishings and fabrics, damages air conditioners, electrical wiring, and appliances, and can cause adverse health symptoms that include nosebleeds, allergies, rashes, and headaches.

According to experts, the public may use the following criteria to assess whether homes and condominiums were built with toxic Chinese-made drywall:

  • They were built or remodeled between 2001 and 2008
  • They have a sulfur or rotten-egg smell, particularly when windows and doors are shut
  • Residents suffer allergies, nose bleeds, upper-respiratory problems and other symptoms that disappear when they leave the homes for an extended time
  • Air conditioning units have repeated coil corrosion
  • The copper in the home, from the electrical ground wires to the copper coils that are in the air conditioning, turns black

Under Iowa law, a consumer who has bought a home that contains toxic drywall has the right to bring a legal claim based on various legal theories against any company that manufactured, distributed, supplied, or used toxic drywall. This includes the builder of the home who used toxic drywall during the construction process.  If you need assistance with this or any other personal injury or wrongful death, product liability, construction law issues, please give me a call and I’ll be happy to see if I can help you.