MMMMMMMMMMMCCCXII. IntroductionA. Two concerns1. How insurance operates within tort systema. Impact on rules concerning, e.g.,(1) liability(2) damages – e.g., collated benefits ruleb. Practical concerns with getting recoveryc. Obligations of insured and insurer (See II below)2. Whether and how insurance operates as alternative to tort system. Examples:xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx. Workers’ compensationyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy. No-fault automobile plans[Note: These topics will not be covered in this course.]B. Types (pp. 776–777)8576. First party (FP)8577. Third party/liability insurance (TP)8578. Hybrid (uninsured/underinsured motorist)II. Insurer’s duty of “good faith” B Wrongful refusal to settle, to defend, or to make first party payments. This is separate tort with its own standard of duty/breach.A. Elements1. duty/breacha. In cases involving TP (liability insurance), insurer has a duty to defend(1) There may be a conflict of interests where not all claims are covered by policy. If so,(a) Insurer may have duty to provide insured with counsel of his choice at insurer’s expense(b) The attorney initially hired by insurer has a duty to inform insured of conflict, possible need for own attorney, and possibly (a) above.(2) Where issue of whether any coverage is involved,b. For both FP and TP insurance, coverage for liability up to limitsc. Standard of care as to “b”. Strict liability is not likely to be used. Jurisdictions (roughly) use one of the following standards:(1) Reasonable prudent insurer – For example, in cases involving TP insurance, a reasonable person looking at having to pay entire claim. This is the South Carolina standard.(2) “Bad faith” as more than negligence B definition? Consider: gross negligence, recklessness, fraudulent (See Pavia at p. 814–815)2. causation3. damagesa. economic(1) For TP, damage award in excess of amount of liability insurance(b) attorneys= fees in defending original suit if insurancecompany refuses to defend B but not for suit against insurance companyb. mental distressc. punitive damages (when appropriate B i.e., what standard of culpability?) (Compare a-(1)-(a) above)B. Policy questions: Why imply duty of good faith? Why tort rather than contract approach to remedy? Parties arguably make contract terms and could agree to include or exclude. Some reasons for implying duty even though not expressed in contract:C. Practical aspects in tort litigation.D. Issues/recurring situationsa. to get own attorneyb. either to contribute to settlement (if insurance company will pay a share) or to pay all of settlement personally. See 1 above.E. To whom is duty owed1. Insured B duty as to both:a. Third Party liability insuranceb. First party insurance B e.g., health insurance, property insurance. The existence and amount of coverage is focus in first party cases. The standard of care is generally the same as with third party insurance.2. Third partiesa. victim B generally no duty (See n. 5, p. 817)b. person liable for payments of victims= losses. Authority conflicts. What are arguments for imposing duty? Some examples of this situation:(1) excess coverage insurance carrier (See n. 10, p. 819)(2) spouse responsible for his/her spouse’s medical care (FP health insurance)F. Insured=s Duty to Cooperate: Insured also has a duty to cooperate with insurance company. (Contract likely to have an explicit clause.)INSURANCE. 13TORTS OUTLINE B HUBBARDTOPIC: INSURANCEMMMMMMMMMMMCCCXII. IntroductionA. Two concerns1. How insurance operates within tort systema. Impact on rules concerning, e.g.,(1) liability(2) damages – e.g., collated benefits ruleb. Practical concerns with getting recoveryc. Obligations of insured and insurer (See II below)2. Whether and how insurance operates as alternative to tort system. Examples:xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx.Workers’ compensationyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy.No-fault automobile plans[Note: These topics will not be covered in this course.]B. Types (pp. 776–777)8576. First party (FP)8577. Third party/liability insurance (TP)8578. Hybrid (uninsured/underinsured motorist)II. Insurer’s duty of “good faith” B Wrongful refusal to settle, to defend, or to make first party payments. This is separate tort with its own standard of duty/breach.A. Elements11. duty/breacha. In cases involving TP (liability insurance), insurer has a duty to defend(1) There may be a conflict of interests where not all claims are covered by policy. If so,(a) Insurer may have duty to provide insured with counsel of his choice at insurer’s expense(b) The attorney initially hired by insurer has a duty to inform insured of conflict, possible need for own attorney, and possibly (a) above.(2) Where issue of whether any coverage is involved,(a) Consider declaratory judgment action.(b) Standard like that in “c” below may apply.b. For both FP and TP insurance, coverage for liability up to limits(1) Demand (For TP, see State Farm at p. 761; Pavia at p. 812;n. 2, p. 816.)c. Standard of care as to “b”. Strict liability is not likely to be used. Jurisdictions (roughly) use one of the following standards:(1) Reasonable prudent insurer – For example, in cases involving TP insurance, a reasonable person looking at having to pay entire claim. This is the South Carolina standard.(2)