RHODE ISLAND JOINS MAJORITY OF JURISDICTIONS REFUSING TO RECOGNIZE GENERAL DUTY OF DUE CARE FROM INDEPENDENT INSURANCE ADJUSTER TO INSURED
This case arose from an insured’s allegation that its insurer both failed to defend it from claims of breach and to indemnify it for a settlement within the policy’s aggregate limit. The insured also sued the insurer’s claims administrator, presenting the novel issue of whether an independent claims administrator can be liable to an insured for bad faith claims handling, tortious interference with contractual relations, or negligence.
Applying Rhode Island law, the District Court of Rhode Island concluded that the insured could maintain a common law claim for bad faith, but could not maintain a statutory cause of action for bad faith because the statutory language limited claims to “the insurer issuing the policy.” (Emphasis added). The court also permitted the insured to proceed with a claim for tortious interference with contractual relations. The court, however, concluded that the insured could not maintain a negligence claim because “…binding [the administrator] to a duty of reasonable care viz-a-viz the insured would be illogical…without, at a bare minimum, holding…the actual insurer to the same.” In so holding, Rhode Island joined the majority of jurisdictions that have refused to recognize a general duty of due care from an independent insurance adjuster or insurance adjusting company to the insured. Robertson Stephens, Inc. and Bank of America Corp. v. Chubb Corp., Case No. 05-00360 (D.R.I. Feb. 14, 2007) .
