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Connecticut Court Holds: No Liability for Failure to Settle Claim Within Policy Limits

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In Carford v. Empire Fire & Marine Ins. Co., No. CV065001946, 2012 WL 4040337 (Conn. Super. Aug. 21, 2012), the Superior Court of Connecticut held an insurer was not liable for negligent failure to settle a claim, where the insurer did not settle the claim within policy limits prior to judgment at trial. In Carford, the Plaintiffs’ filed suit against its insurer, Empire Fire & Marine Insurance Company (“Empire”), alleging Empire was negligent in failing to settle the Plaintiffs’ insurance claim within the policy limits. Specifically, the Plaintiffs’ contended Empire failed to accept all written offers of settlement, failed to conduct its claim evaluation objectively and impartially, and it failed to pay the excess amount of the underlying judgment. The court disagreed, ruling in favor of the insurer, finding the insurer acted reasonably in investigating the claim and finding under the totality of the circumstances, the facts did not indicate that Empire put its interests above those of the insured. In reaching its decision the court gave weight to two of the insurer’s actions. First, Empire’s letter to its reinsurer in which Empire stated they wished to withhold payment of the policy limits until maximum medical improvement was obtained by the plaintiffs to insure the claim warranted payment of the limits and second, Empire’s suggestion to the Plaintiffs to file suit while the insurer continued to collect information it needed to properly evaluate the claim signified the insurer was balancing its needs with those of the Plaintiffs. The Connecticut Superior Court’s decision to rule in favor of the insurer demonstrates the burden on policy holders in trying to prove such claims and the courts willingness to rule in favor of insurers when there is no showing the insurer placed its own interest above those of the policy holders.