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Bad-faith litigation has long been a contentious — and big-dollar — issue for insurers.

Liberty Mutual ordered to pay $4.5M on a $25,000 policy

A federal district court in Illinois has ordered Liberty Mutual to pay a $4.5 million judgment despite the fact that it didn't find that the insurer had acted in bad faith.

By Steven A. Meyerowitz, Esq., Director, FC&S Legal | Updated on August 16, 2017
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According to the district court, even absent bad faith, damages for breach of the duty to defend could be in excess of the policy limits and were “measured by the consequences proximately caused by the breach.” (Photo: Shutterstock)

This story is reprinted with permission from FC&S Legal, the industry’s only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.

A federal district court in Illinois has ordered Liberty Mutual Fire Insurance Company to pay a $4.5 million judgment, plus interest, notwithstanding its policy’s $25,000 limits — and despite the fact that it did not find that the insurer had acted in bad faith in declining to defend a 16 year old in a negligence action.

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