Problem Jurisdictions for Insurers:
Judicial Hellhole or Almost Heaven, West Virginia?
Lee Murray Hall
Jenkins Fenstermaker, PLLC
P.O. Box 2688
Huntington, WV 25726-2688
(304) 399-9704
[email protected]
Lee Murray Hall is a partner with Jenkins Fenstermaker, PLLC, where she
represents insurance carriers in coverage and bad faith disputes throughout the
state of West Virginia. She also defends insureds in municipal liability claims,
motor vehicle and trucking claims, professional liability claims, premises claims,
construction accidents, and deliberate intent claims. Within her insurance coverage
practice, Lee routinely provides coverage opinions and files declaratory actions on
cutting edge legal issues. Her representation of carriers often begins in the claims
handling process, well before the filing of a coverage lawsuit, and extends through
trial, settlement and appeal. She also routinely provides preventative counseling
and negotiation to avoid litigation. Lee was selected as the “2016 Defense Lawyer
of the Year” by the Defense Trial Counsel of West Virginia and was named on Super
Lawyers “Top 10 Attorneys List” for the State of West Virginia in 2014 and 2015. She
currently serves as Vice-President of the West Virginia Board of Law Examiners and
has served as President of the WVDTC. She was named a West Virginia Bar Fellow
in 2015 and is a member of the Federation of Defense and Corporate Counsel, where
co-chairs the Professional Liability Committee and is a member of the International
Association of Defense Counsel. She has been recognized for her expertise in
Insurance Coverage by Bests, Super Lawyers, Benchmark, and Chambers USA
since 2007. Lee also founded and served as the initial chair of the Insurance
Committee for the West Virginia Defense Trial Counsel, where she published regular
legal updates on West Virginia tort and insurance law for clients and insurance
professionals and monitored legislative and regulatory changes.
Problem Jurisdictions for Insurers:
Judicial Hellhole or Almost Heaven, West Virginia?
Table of Contents
I.Introduction....................................................................................................................................................5
II. West Virginia Bad Faith Law: Not Quite Almost Heaven.............................................................................5
A. The Rise, Fall and Threatened Revival of Third Party Bad Faith..........................................................5
B. Administrative Proceedings before the Office of the Insurance Commissioner.................................8
1. Third-Party Complaints...................................................................................................................8
2. First-Party Complaints....................................................................................................................9
3. Requirement to Maintain a Complaint Log...................................................................................9
C. Time Limit Demands and the Assignment of Excess Verdicts under Shamblin.................................9
1. Limitations on Shamblin: Strahin v. Sullivan...............................................................................10
D. Hayseeds and the Ever-Expanding Definition of a First Party Claimant...........................................10
III. Coverage Concerns Unique to West Virginia..............................................................................................11
A. Who Is an Insured?................................................................................................................................11
1. The Insured Contract.....................................................................................................................11
2. Certificate Holder as a Vehicle to First Party Insured Status......................................................13
B. Coverage by Estoppel............................................................................................................................14
C. Duty to Defend: The Four Corners Just Keep Growing.......................................................................15
D. UM and UIM Offers: Use the Form......................................................................................................16
IV. So, Where Is the “Almost Heaven” Part?......................................................................................................17
V.Conclusion.....................................................................................................................................................18
Endnotes......................................................................................................................................................................18
Problem Jurisdictions for Insurers: Judicial Hellhole or Almost Heaven... ■ Hall ■ 3
Problem Jurisdictions for Insurers:
Judicial Hellhole or Almost Heaven, West Virginia?
I.Introduction
“Judicial Hellhole” or “Almost Heaven”? Most carriers find claims and coverage issues in West Virginia closer to the former rather than the latter.
As a practical matter, only one insurance carrier has a home office in West Virginia, and its traditional market is workers’ compensation coverage. In sharp contrast to the neighboring state of Ohio, carriers
have a small presence in the state legislature, employ relatively few people, and have few claims offices within
the state. Moreover, both in population and geographically, West Virginia is a small state. Therefore, carriers
have relatively little opportunity to learn the terrain. Thus, claims and coverage decisions are made by claims
personnel with a nationwide or regional focus and little specific knowledge of West Virginia.
Finally, the West Virginia Supreme Court is territorial and somewhat paternalistic about its bar.
These tendencies are reflected in its pro hac vice rules, admission to practice rules, and even the local preferences of some circuit court judges. Despite numerous legislative reforms, the statutory abrogation of third
party bad faith, and Appellate Rules that provide for a right of appeal, West Virginia’s reputation as a problem
jurisdiction remains intact. This paper focuses on the substantive and procedural roadblocks that a carrier
handling an underlying claim, a coverage issue, or even a bad faith claim may face in West Virginia.
II. West Virginia Bad Faith Law: Not Quite Almost Heaven
A. The Rise, Fall and Threatened Revival of Third Party Bad Faith
Third party bad faith claims were first recognized in West Virginia in 1981. See generally Jenkins v.
J.C. Penney Casualty Insurance Co., 167 W.Va. 597, 280 S.E.2d 252 (1981). The cause of action quickly gained
appeal and by the early 2000s, aggressive plaintiffs’ counsel routinely included a bad faith count against
the carrier in virtually every significant suit filed. This required the carrier to retain separate counsel, file a
motion to stay and bifurcate, and appear in court to argue the motion. Although such motions were routinely
granted and virtually mandated in liability claims, occasionally, a rogue judge would nevertheless deny the
motion, requiring an immediate appeal. Even when granted, the carrier’s counsel had to continue to monitor
the underlying case until conclusion, at additional cost. The costs of third party bad faith claims resulted in
increased premiums and drove carriers to refuse to write risks in West Virginia by the early 2000s.
In 2005, the legislature responded by enacting a series of tort reforms under the leadership of thenGovernor Joe Manchin. The most progressive of these reforms eliminated third party bad faith claims. See
W.Va. Code §33-11-4a (2005). The West Virginia Insurance Commissioner thereafter amended the definition
of “third-party claimant” to include “any individual, corporation, association, partnership or other legal entity
asserting a claim against any individual, corporation, association, partnership or other legal entity insured
under an insurance policy or insurance contract of an insurer.” W.Va. C.S.R. §114-14-2.8 (2006).
Insurance carriers enjoyed several years of relative peace and harmony within the state until 2010,
when the Supreme Court of Appeals decided Michael v. Appalachian Heating, LLC, 226 W.Va. 394, 701 S.E.2d
116 (2010). Michael arose out of an apartment fire at a public housing complex. The plaintiffs, African Americans residents of the housing complex whose personal property was destroyed in the fire, alleged that the fire
was caused by improper electrical work by Appalachian Heating. Plaintiffs brought suit against State Auto,
Problem Jurisdictions for Insurers: Judicial Hellhole or Almost Heaven... ■ Hall ■ 5
Appalachian Heating’s insurer, alleging that State Auto improperly considered the plaintiffs’ race and residence in public housing while evaluating, processing, and adjusting plaintiffs’ claim. State Auto immediately
moved to dismiss the suit based upon the abrogation of third party bad faith. Id. at 119-20.
The Court held that the West Virginia Human Rights Act prohibits unlawful discrimination by a tortfeasor’s insurer “in the settlement of a property damage claim when the discrimination is based upon race,
religion, color, national origin, ancestry, sex, age, blindness, disability or familial status.” Id. at 124-25. Moreover, the Court specifically held that “[t]he prohibition of a third-party law suit against an insurer under the
[West Virginia Unfair Trade Practices Act] does not preclude a third-party cause of action against an insurer
under . . . the West Virginia Human Rights Act.” Id. at 125.
Michael arguably opened the door to discovery of information in the claims file regarding settlement
decision and the factors considered when evaluating settlement decisions. Although many, including (now)
Chief Justice Ketchum in his dissenting opinion, predicted that Michael would open the floodgates to bad faith
ligation, it has not done so. “What I foresee, in the future, is that the Human Rights Act will be subjected to
the same abuse that maligned the Unfair Trade Practices Act. A handful of litigators will unleash a flood of
lawsuits alleging discrimination in the settlement of third-party property damage claims by insurance companies -- and in most of those cases, the evidence of “discrimination” will be entirely spurious . . . [M]y years
of practicing law has taught me that a mere allegation of unlawful discrimination can be a powerful weapon
for negotiation of a spurious claim. Jurors do not like insurance companies.” Id. at 127. Relatively few Michael
cases have actually been filed. The only one that the author is aware of to be actively litigated was eventually
dismissed on summary judgment by Judge Stamp in the Northern District of West Virginia, and affirmed on
appeal by the Fourth Circuit. Smith v. Scottsdale Ins. Co., 621 F. App’x 743 (4th Cir. 2015). Many speculate that
West Virginia’s relative lack of diversity reduces the opportunities for bringing such claims. Regardless of the
reason, Michael has had a relatively small impact on the revival of bad faith claims.
Less than a year after the Court decided Michael, it expanded the definition of “first party claimant” in
Loudin v. Nat’l Liab. & Fire Ins. Co., 228 W.Va. 34, 716 S.E.2d 696 (2011), to include the person who paid for a
policy even if that is not the person against whom a claim is made. Specifically, the purchaser of an automobile
liability policy was injured by the negligence of a permissive driver of the purchaser’s automobile. The policyholder asserted a liability claim against the driver, which required the carrier to defend the driver. Thus, the policy holder was a claimant who asserted a third party claim against the driver of his vehicle. See id. at 707-09.
Every court in the country that had addressed this issue had concluded that the claimant was a third
party claimant, and therefore not entitled to assert a third party bad faith claim against the insurer. The West
Virginia Court rejected the majority position, concluding that the policyholder was involved in a dispute
with his own carrier, regardless of the claimant’s status in the particular claim. Therefore, the purchaser could
assert a bad faith claim against his carrier arising out of his third party liability claim against the driver. See id.
at 702-03.
In 2013, the Court further expanded the definition of “first party claimant” in Dorsey v. Progressive
Classic Ins. Co., 232 W.Va. 595, 753 S.E.2d 93 (2013), , in which it concluded that any person asserting a claim
for medical payments under the policy meets the definition of a first party claimant and may sue for bad faith.
Id. at 601. Petitioner Dorsey was injured in a car accident while riding as guest passenger in a vehicle insured
by Progressive. As a guest passenger, Dorsey was entitled to and received medical payments benefits under
the Progressive policy. After Dorsey pursued, and subsequently settled, a liability suit against the tortfeasor,
Progressive asserted a subrogation claim against the settlement proceeds for the medical payments it had paid
for Dorsey’s benefit. However, Progressive refused to reduce its subrogation claim to reflect a pro rata share of
attorney fees and costs incurred in pursuing the tortfeasor. Dorsey alleged that Progressive’s failure to reduce
6 ■ Insurance Coverage and Practice ■ December 2016
the subrogation claim delayed the settlement of her claim and constituted statutory and common law bad
faith. See id. at 94.
The Supreme Court of Appeals held that Dorsey was a first-party insured for purposes of her statutory and common law bad faith claims. Id. at 99. In so holding, the Court created the following new syllabus
point:
Where a West Virginia motor vehicle insurance policy includes within the definition of an
insured person “any other person while occupying a covered vehicle,” a guest passenger is a firstparty insured under the medical payments section of the policy.
Id. at 94.
Finally and most significantly, on June 11, 2016, the Court decided State ex rel. State Auto Prop. Ins.
Companies v. Stucky, No. 15-1178, 2016 WL 3410352 (W.Va. June 14, 2016), in which it found that a policyholder states a claim for first-party bad faith where it alleges its insurer failed to use good faith in settling a
claim by someone the policyholder allegedly harmed or injured. Id. at *4.
In Stucky, an insured contractor was building a house for its co-defendants. The plaintiffs, adjacent property owners, filed a complaint against the insured contractor alleging that the construction activity
caused damage to their property. The contractor then filed a third-party complaint against State Auto arguing that if it had properly and promptly settled the adjacent property owners’ claims, the contractor would not
have been subjected to suit. Id. at *1.
As Stucky did not involve a claim by the contractor against its insurer for payment by the insurer to the
contractor, but involved a claim by a third-party against the contractor for which the contractor sought a defense
and indemnification by its insurer, State Auto argued that it could not be held liable for the manner in which
State Auto handled the adjacent property owners’ claims. Id. In a 3-2 Memorandum Decision, however, a majority held that the insured could maintain a statutory bad faith claim for its insurer’s conduct in subjecting it to litigation, even though the claim against it was ultimately settled with a full release and dismissed. Id. at *6.
Two justices issued strong dissents, with Chief Justice Ketchum noting: “Our law allows only two
types of first-party bad faith claims, that is, where an insured (like CMD) sues its insurer (like State Auto):” (1)
“[W]hen an insurer fails to use good faith in resolving a ‘loss claim’ filed by the insured” and (2) “[A]s a result
of the insurer’s failure to use good faith in settling a lawsuit by a third-party the insured harmed” as a result of
“an ‘excess judgment’ against the insured,” neither of which was satisfied because (1) the policyholder filed no
claim against State Auto, and (2) State Auto eventually settled the claim against its policyholder and no excess
judgment was entered. Id. at *6.
Justice Loughry’s dissent echoed the same concerns: “What the majority has unwittingly allowed by
not granting the requested writ of prohibition is the effective sanctioning of a third-party bad faith claim–a
claim that is statutorily prohibited.” Id. at *9.
The policyholder in Stucky was defended at the insurer’s expense, and received a full release. Thus,
his damages are unclear, perhaps involving the assertion of annoyance damages, reputational damages, lost
profits, attorney fees, and punitive damages. It is doubtful, however, that the legislature intended such an
outcome when it abolished third-party bad faith suits. This holding has the potential to foster collusion by
allowing the insured to resolve the claim with the insured, but still assign his claim against the carrier for the
delay in settlement and the annoyance and inconvenience of subjecting him to litigation by its failure to settle
quickly enough.
The implications of the Stucky decision for insurance companies doing business in West Virginia
are profound. Any time a policyholder is subjected to suit, the policyholder may then sue the insurer, even
Problem Jurisdictions for Insurers: Judicial Hellhole or Almost Heaven... ■ Hall ■ 7
though under most policies it is the insurer which controls the investigation, settlement, and defense of thirdparty claims. It may then seek damages as a result of the insurer’s alleged delays in processing not a first-party
claim, but a third-party claim.
In short, although Third Party Bad Faith Claims have been eliminated, insurers need to be vigilant
about who qualifies as a First Party Claimant under West Virginia statutory or case law. For now, it appears to
include 1) anyone protected by the Human Rights Act; 2) anyone asserting a clam for medical payments; 3)
a beneficiary under a life insurance policy; 4) anyone who purchased a liability policy, regardless of their status when making the claim; and 5) an insured, even when the carrier obtained a complete release. Of course,
it also includes the traditional first party definition of a person asserting a right to payment under his or her
own insurance policy, including a UM or UIM policy.
B. Administrative Proceedings before the Office of the Insurance
Commissioner
1. Third-Party Complaints
When the West Virginia Legislature abolished the private cause of action for third-party “bad faith,”
it granted the Offices of the Insurance Commissioner (OIC) with the exclusive jurisdiction for such complaints. See W.Va. Code §33-11-4a. A third-party Claimant now files an Administrative Complaint with the
Insurance Commissioner’s office, which is then sent to the carrier by the OIC:
• Within 5 working days of receipt of complaint: The Commissioner provides the insurer with
written notice of the alleged violation.
• Within 45 days of carrier’s receipt of the Complaint: The carrier is required to advise the
Commissioner in writing the status of negotiations with Claimant.
• The Code provides for a 60 day “right to cure” period: If the carrier substantially corrects
the circumstances that gave rise to the violation or offers to resolve the Complaint in a manner
found reasonable by the Commissioner within 60 days after receiving the notice from the Commissioner, the Commissioner shall close the Complaint with no further action, either by the
Commissioner or by the third-party. The insurer is to provide notice to the Commissioner of the
disposition of the Complaint within 15 days of any settlement, but no later than 60 days from
receipt of the notice of the Complaint.
If the parties do not resolve the issue within the sixty day period, a report is due on the sixtieth day
to the Commissioner. The entire claims file and a certified policy must also be provided to the Commissioner’s
Legal Department. The Commissioner permits redaction of attorney-client communications.
The OIC’s investigators review the claim file to determine whether a reasonable and a prompt investigation was conducted. The OIC’s legal staff also reviews the claim file for compliance with applicable regulations.
The OIC Legal Department issues a letter indicating a finding of “merit” or “no merit.” A “no merit”
finding means the review did not reveal the possibility of violations of the UTPA or the Regulations.
A “merit letter” is not a finding of any violations. However, it means the review uncovered enough to
justify additional investigation in the form of an administrative hearing. Notice must be provided at least 10
days prior to the scheduled hearing.
The Complainant bears the burden of proof at the hearing, which is governed by the Rules of Evidence. The Hearing Examiner may request submission of briefs and a proposed order at the conclusion of
8 ■ Insurance Coverage and Practice ■ December 2016
evidence. The Hearing Examiner then issues a recommended decision within 45 days. The Commissioner
will issue a final order in which he or she may either accept, reject, or modify the Hearing Examiner’s recommended decision.
If the file indicates violations of W.Va. Code §33-11-4(9) (unfair or deceptive acts or practices
defined) and/or the West Virginia Insurance Regulations (114 CSR Title 14) are found within the file at issue,
the OIC must conduct a targeted market conduct examination looking for a general business practice by the
company of violations before it can take any further action.
If the OIC finds that the insurer has engaged in a general business practice of unfair settlement practices, the Commissioner must issue a cease and desist order and may at his or her discretion order one or
more of the following penalties:
• Assess a civil penalty1;
• Revoke or suspend license2;
• Require restitution3 to the Claimant.
A good faith disagreement as to the value of a claim is not an unfair claims settlement practice. W.Va.
Code §33-11-4a(g).
An insurer may appeal the finding of an unfair claims settlement practice by the Commissioner to
the Circuit Court of Kanawha County, West Virginia and, from there, to the Supreme Court of Appeals of West
Virginia. See W.Va. Code §33-2-14 and the Administrative Procedures Act, W.Va. Code §29A-5-1 et seq.
2. First-Party Complaints
A first-party complainant may also file a Complaint with the OIC. The OIC then sends a copy of the
Complaint to the insurance company with a letter requesting a response to the Complaint with supporting
documentation within 15 working days from the date of the letter. The insurer’s response is submitted to and
reviewed by the OIC’s legal staff. If the legal staff finds that the Complaint may have merit, they will direct the
matter to an administrative hearing. Once the Commissioner sets the hearing, first-party complaints proceed
in the same manner as third-party complaints.
3.Requirement to Maintain a Complaint Log
W.Va. Code §33-11-4(10) requires a company to keep a complaint log:
No insurer shall fail to maintain a complete record of all the complaints which it has received
since the date of its last examination. This record shall indicate the total number of complaints,
their classification by line of insurance, the nature of each complaint, the disposition of these
complaints, and the time it took to process each complaint. For purposes of this subsection,
“complaint” shall mean any written communication primarily expressing a grievance.
C. Time Limit Demands and the Assignment of Excess Verdicts under
Shamblin
West Virginia permits first party bad faith claim based on either a private cause of action under the
UTPA or based upon a verdict in excess of policy limits where the insurance carrier had an opportunity to
resolve the claim within policy limits. The seminal case on point is Shamblin v. Nationwide Mut. Ins. Co., 183
W.Va. 585, 396 S.E.2d 766 (1990). While Shamblin purports to establish a hybrid “negligence-strict liability”
standard, the author is not aware of any case in which an insurance carrier has successfully deflected the burden of the excess verdict. Shamblin states wherever there is a failure on the part of an insurer to settle within
Problem Jurisdictions for Insurers: Judicial Hellhole or Almost Heaven... ■ Hall ■ 9
policy limits where there exists an opportunity to settle and where such settlement within policy limits would
release the insured from any and all personal liability, the insurer has prima facie failed to act in its insured’s
best interest, and such failure to so settle prima facie constitutes bad faith toward its insured. The burden then
shifts to the carrier to prove by clear and convincing evidence that it attempted to settle and that its failure
to do so was based upon reasonable and substantial grounds and that it accorded the interests and the rights
of its insured at least as great in interest as its own. See id. at 595. As a practical matter, this is a very difficult
standard to meet.
Justice Neely’s concurring opinion in Shamblin sets the tone for the actual Shamblin standard:
Can you honestly imagine a situation where an insurance company fails to settle within the policy limits, the policyholder gets stuck with an excess judgment, and this court does not require
the insurance company to indemnify the policyholder? That will happen the same day the sun
rises in the West! As far as I am concerned, even if the insurance company is run by angels, archangels, cherubim and seraphim, and the entire heavenly host sing of due diligence and reasonable care, I will never, under any circumstances, vote that a policyholder instead of an insurer
pays the excess judgment when it was possible to settle a case within the coverage limits.
Id. at 780 (Neely, J. concurring).
1. Limitations on Shamblin: Strahin v. Sullivan
Following Shamblin, many insureds attempted to escape their responsibility by simply assigning their
bad faith claim over to the plaintiff in exchange for a release of all personal liability, and would do so shortly
after suit was filed. Following on the heels of its reform efforts of 2005, the Court decided Strahin v. Sullivan,
220 W.Va. 329, 647 S.E.2d 765 (2007). In Strahin, the Court concluded that the entire point of an excess verdict was premised on the actual personal exposure to the insured. Therefore, the insured actually had to face
excess exposure before the verdict could be assigned:
[I]n order for an insured or an assignee of an insured to recover the amount of a verdict in excess
of the applicable insurance policy limits from an insurer pursuant to this Court’s decision in
Shamblin, the insured must be actually exposed to personal liability in excess of the policy limits
at the time the excess verdict is rendered.
Id. at 773.
By assigning the verdict before the excess verdict was rendered, the plaintiff eliminated any possibility for an excess verdict and therefore, did not recover it against the carrier. The Strahin Court noted it failure
to address the impact of an assignment of UTPA claims, which suggests that they can be assigned pre-verdict.
D. Hayseeds and the Ever-Expanding Definition of a First Party Claimant
Many first party insureds simply elect to bring a claim for coverage under Hayseeds, Inc. v. State Farm
Fire & Cas., 177 W.Va. 323, 352 S.E.2d 73 (1986), holding modified by Miller v. Fluharty, 201 W.Va. 685, 500
S.E.2d 310 (1997). The West Virginia Supreme Court of Appeals used Hayseeds as a vehicle for defining a first
party insured’s remedy in West Virginia nearly thirty years ago. The Court clarified that for purposes of first
party claims for coverage, it would not evaluate whether the insurer’s position was made in good faith or bad
faith. “We consider it of little importance whether an insurer contests an insured’s claim in good or bad faith.
In either case, the insured is out his consequential damages and attorneys’ fees.” Id. at 79. If a court determines that benefits should have been paid, the insurance carrier must make the insured whole regardless of
its intent. Syl. Pt. 1 states the law: “Whenever a policyholder substantially prevails in a property damage suit
against its insurer, the insurer is liable for: (1) the insured’s reasonable attorneys’ fees in vindicating its claim;
10 ■ Insurance Coverage and Practice ■ December 2016
(2) the insured’s damages for economic loss caused by the settlement, and (3) damages for aggravation and
inconvenience.” Id. at 74. Punitive damages are typically not awarded unless the insured proves malice. By
malice, the Court means “actual malice”, which is defined to mean that the insurance company actually knew
that the claim was proper but willfully, maliciously and intentionally withheld payment. Id. at 80.
Hayseeds sets a presumptive attorneys’ fee of one-third of the face amount of the policy, unless the
policy limit is extremely small or enormously large (using 1986 dollars, small means under $20,000 and large
means over $1 million). The Court has not addressed how modern contingency fee agreements, which now
approach 40 percent and even 50 percent, affect Hayseeds. In addition, the Court has not yet extended Hayseeds to apply to liability claims. As discussed below, however, federal courts construing West Virginia law are
trending in that direction.
Hayseeds was subsequently extended to apply to all first party claims, including claims for underinsured and uninsured motorist benefits and all other insurance benefits paid directly to the insured, including
property, life insurance and accident insurance. See generally Marshall v. Saseen, 192 W.Va. 94, 450 S.E.2d 791
(1994).
As discussed above, it appears that the West Virginia Supreme Court of Appeals has now recognized
a new cause of action for a first party insured to assert a claim for a delay in settling a claim, even when the
claim against the insured is subsequently settled with a complete release. See generally Stucky, No. 15-1178,
2016 WL 3410352. Moreover, thanks to the ever-expanding definition of a first party claimant, Hayseeds
damages are arguably available to claimants seeking med-pay benefits and an insured whose liability carrier
mounts too aggressive a defense on behalf of a person being sued by the insured.
Hayseeds claims arise primarily in the context of coverage disputes, and often simplify the risk analysis. In a dispute regarding the existence of UIM coverage, the available benefits under a life insurance policy,
or whether an exclusion prevents recovery in a first party property damage claim, the carrier has a fairly simple rubric for determining the potential exposure. Where the policy limit is large, however, that exposure is
also large, and therefore factors into coverage decisions.
III. Coverage Concerns Unique to West Virginia
A. Who Is an Insured?
1.The Insured Contract
West Virginia unique position on the impact of an indemnity contract takes many carriers by surprise and leaves them exposed to a bad faith suit for a refusal to defend or indemnify their “insured.” The West
Virginia Supreme Court held in Consolidation Coal Co. v. Boston Old Colony Ins. Co., 508 S.E.2d 102 (W.Va.
1998) that “when a party has an ‘insured contract,’ that party stands in the same shoes as the insured for coverage purposes.”
Consolidation Coal involved a series of claims arising from a coal silo fire and a mine shaft explosion.
Prior to these Consolidation Coal Company (“CCC”) entered into “Blanket Contracts” with M.A. Heston, Inc.
(“Heston”) that established terms and conditions under which Heston would perform work as an independent
contractor for CCC. CCC and Heston also entered into “Purchase Order Contracts” which provided that all work
performed under the Purchase Order Contracts was to be performed in accordance with the Blanket Contracts.
The Blanket Contracts and the Purchase Order Contracts were insured under a policy issued by
Boston Old Colony Insurance Company that insured Heston on the job sites. Heston subcontracted with Omni
Problem Jurisdictions for Insurers: Judicial Hellhole or Almost Heaven... ■ Hall ■ 11
Drilling, Inc. (“Omni”) for assistance in performing some of its obligations under the Contracts. Omni and
Heston shared a corporate connection and were owned by members of the same family. Accordingly, Omni
was added to the Boston policy as an additional insured.
On April 3, 1991, two of Heston’s employees were injured in a fire while performing work at a plant
operated by CCC. Both employees filed civil actions against CCC. On March 19, 1992, Heston and Omni
were installing a de-watering pipe at a mine operated by CCC when an explosion occurred. Four people were
killed and five others were injured in the explosion. A leased crane also sustained damage. As a result, ten
civil actions were filed against CCC, Heston, Omni, and other unspecified entities. CCC filed cross-claims
against Heston, Omni, and Boston, demanding contractual indemnity, contribution, insurance coverage, and
a defense in the underlying tort claims.
After the underlying tort claims were settled, the parties pursued the insurance-related claims.
Boston previously contributed its $1,000,000 policy limit towards settlement of the ten claims arising from
the explosion and moved for summary judgment on the amount of coverage available under its policy. CCC
argued that it was entitled to an additional $1,000,000 in coverage under the terms of the policy, because both
Heston and Omni were separately named insureds under the Boston policy, each was rated individually, and
each paid a separate premium. The trial court found that the Boston policy provided a maximum limit of
$1,000,000 for any one occurrence, regardless of the number of insureds, and CCC appealed its ruling.
The West Virginia Supreme Court noted that it was “undisputed that CCC had an ‘insured contract’
as defined by the [Boston] policy. The blanket contracts executed by CCC and Heston contained indemnity
clauses, and Heston was insured under the Boston policy. Omni was added to the Boston policy as an additional insured but was individually rated and paid a separate premium. Accordingly, the Court found an
ambiguity between the payment of separately computed premiums for each insured and the per occurrence
liability limit.
The Court, consistent with “well-settled” West Virginia insurance law, construed the ambiguity
against Boston and in favor of the insured. Id. at 392. The Court also discussed the reasonable expectations
doctrine, which requires that “the objectively reasonable expectations of applicants and intended beneficiaries
regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations.” Id. Additionally, “‘where ambiguous policy provisions would
largely nullify the purpose of indemnifying the insured, the application of those provisions will be severely
restricted.’” Id. (quoting National Mut. Ins. Co. v. McMahon & Sons, Inc., 356 S.E.2d 488 (W.Va. 1987)).
Ultimately, the Court concluded that “CCC’s expectation of additional coverage in this case is not
unreasonable” and that application of the $1,000,000 liability limit would “nullify the meaning and purpose of
the ‘insured contract’ provisions of the policy.” Id. Consolidation Coal’s places an additional insured on equal
footing with the named insured for purposes of coverage.
The Court expanded on its position in Marlin v. Wetzel County Bd. of Educ., 569 S.E.2d 462 (W.Va.
2002). Commercial Union, the carrier in Marlin, argued that it had no direct duty to provide coverage or a
defense to the Board. The Court stated in response:
Our law in this area is clear. We stated in Syl. Pt. 7 of Consolidation Coal Company v. Boston Old
Colony Insurance Company, 203 W.Va. 385, 508 S.E.2d 102 (1998) that: in a policy for commercial general liability insurance, when a party has a ‘insured contract,’ that party stands in the
same shoes as the insured for coverage purposes. The question we must resolve, therefore, is
whether the construction contract between Bill Rich Construction and the Board is a ‘insured
contract’ under the commercial union general liability policy.
12 ■ Insurance Coverage and Practice ■ December 2016
The Court held that the phrase “liability assumed by the insured under any contract” in an insurance
policy, or words to that effect, refers to liability incurred when an insured promises to indemnify or hold harmless another party and thereby agrees to assume that other party’s tort liability. Upon confirming the language
in the contract, it concluded that the language in the construction contract was an insured contract, and clearly
shifted legal responsibility for some measure of the plaintiff ’s tort liability to the construction company and
therefore to Commercial Union. “In according with our holding in Syl. Pt. 7 of Consolidation Coal, because the
Board had an insured contract with Bill Rich Construction, the Board stands in the same shoes as Bill Rich Construction for coverage purposes. Therefore, the Board could seek coverage directly under the policy and the carrier erred by refusing to provide the Board with a legal defense and coverage under the liability policy.”
Many carriers have since modified the definition of insured contract through endorsement, to eliminate definition (f). The West Virginia Court has yet to rule on the enforceability of these endorsements though
we believe that they are clear and unambiguous. If they have been sufficiently disclosed through providing the
policy to the insured and are conspicuously displayed in the policy, carriers should have a strong argument to
defeat the impact of Marlin.
2.Certificate Holder as a Vehicle to First Party Insured Status
In Marlin v. Wetzel County Bd. of Educ., 569 S.E.2d 462 (W.Va. 2002), the West Virginia Supreme
Court also addressed the impact of a Certificate of Insurance. The coverage dispute in Marlin resulted from a
school construction contract in Wetzel County, West Virginia. The contract required Bill Rich Construction to
provide the Board with a “certificate of insurance” indicating that the Board had been added to the policy as
an additional insured. Id. at 465.
As required by the construction contract, Bill Rich Construction arranged for the insurance agency
to issue a certificate of insurance that listed the Board as an “additionally insured” and as a certificate holder.
Id. The certificate of insurance was delivered to the Board.
When suit was filed, however, the carrier denied the Board’s demand for coverage because it had
never received the certificate of insurance or any other document adding the Board as an additional insured.
Commercial Union also argued that the certificate was issued “for information only” and could not
modify the policies to extend coverage. The certificate included standard disclaimer language:
This certificate is issued as a matter of information only and confers no rights upon the certificate
holder. This certificate does not amend, extend or alter the coverage afforded by the policies below.
and
This is to certify that [the] policies of insurance listed below have been issued to the insured named
above for the policy period indicated. Notwithstanding any requirement, term or condition of any
contract or other document with respect to which this certificate may be issued or may pertain, the
insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such policies.
In the subsequent declaratory judgment action, the trial court agreed that the carrier was not
required to provide coverage because the Board could not have had a reasonable expectation of coverage
based on the prominent disclaimer language on the certificate of insurance. On appeal, however, the Board
argued that an agent for Commercial Union issued the certificate of insurance and that it relied on the representation to its detriment, because it thereby allowed Bill Rich Construction to perform the construction work
without adequate coverage.
The Court described certificates of insurance as follows:
Problem Jurisdictions for Insurers: Judicial Hellhole or Almost Heaven... ■ Hall ■ 13
A certificate of insurance is a form that is completed by an insurance broker at the request of
an insurance policyholder, and is a document evidencing the fact that an insurance policy has
been written and includes a statement of the coverage of the policy in general terms. Black’s Law
Dictionary (5th Ed.1979). A certificate of insurance “serves merely as evidence of the insurance
and is not a part of the insurance contract.” Richard H. Glucksman et al., “Additional Insured
Endorsements: Their Vital Importance in Construction Defect Litigation,” 21 Construction Lawyer 30, 33 (Winter 2001). “[C]ertificates provide evidence that certain general types of policies
are in place on the date the certificate is issued and that these policies have the limits and policy
periods shown.” Donald S. Malecki, et al., The Additional Insured Book 341 (4th Ed., 2000).
The Court also examined in detail a common problem with certificates of insurance: “insurance
agents often issue certificates of insurance detailing a particular form of coverage, but then fail to notify the
insurance company of the need to alter or amend the coverage to match the certificate.” Id. at 470. After considering case law from other jurisdictions, the Court stated its holding as follows:
We therefore hold that a certificate of insurance is evidence of insurance coverage, and is not a
separate and distinct contract for insurance. However, because a certificate of insurance is an
insurance company’s written representation that a policyholder has certain insurance coverage
in effect at the time the certificate is issued, the insurance company may be estopped from later
denying the existence of that coverage when the policyholder or the recipient of a certificate has
reasonably relied to their detriment upon a misrepresentation in the certificate.
The Court held that Commercial Union’s insistence that the certificate naming the Board as an additional insured was “clerical error” was not sufficient to overcome “the estoppel effect of its misrepresentation.”
Thus, even in the absence of notice to the insurer of the issuance of the certificate, and even without payment
of an additional premium, the Marlin holding conferred first-party insured status on the Board.
The West Virginia Supreme Court recently had the opportunity to revisit the issue of a certificate holder’s rights in State ex rel. Owners Insurance Company v. McGraw, 760 S.E.2d 590 (W.Va. 2014) and
declined to do so. McGraw primarily involved a conflicts of law issue. However, the central coverage issue
turned on Owners Insurance’s duty to provide coverage to a certificate holder.
Despite arguments by Owners Insurance that McGraw presented a good chance to clarify the Marlin holding and provide guidance on the issue and legal effect of certificates of insurance, the Court simply
declined to address the issue pending final outcome of the coverage dispute.
B. Coverage by Estoppel
In Potesta v. U.S. Fidelity & Guar. Co., 504 S.E.2d 135 (W.Va. 1998), the West Virginia Supreme Court
answered the following two certified questions from the Fourth Circuit Court of Appeals:
Question 1:Must an insured have detrimentally relied upon on an insurer’s previously stated
reason for denying coverage in order to assert waiver or estoppel to prevent the
insurer, in subsequent litigation, from asserting other, previously unarticulated
reasons for denying coverage?
Question 2:Are the principles of waiver and estoppel inoperable to extend insurance coverage
beyond the terms of an insurance contract except where either the insurer
expressly relinquishes its right to deny coverage or the insured detrimentally relies
upon the insurer’s unconditional defense of an action brought against the insured?
14 ■ Insurance Coverage and Practice ■ December 2016
In answering the first question, the Court distinguished between waiver and estoppel and held
that “there is no requirement that an insured have detrimentally relied upon an insurer’s previously stated
reason(s) for denying coverage in order to assert waiver to prevent the insurer, in subsequent litigation, from
asserting other, previously unarticulated reasons for denying coverage.” Instead, the burden rests with the
insured to show, “by clear and convincing evidence where waiver is implied, that the insurer intentionally and
knowingly waived the previously articulated reason(s) for denying coverage.”
Estoppel, however, requires the insured to “prove that s/he was induced to act or to refrain from acting to her/his detriment because of her/his reasonable reliance on the previously stated grounds for declination.” Although “generally, the principles of waiver and estoppel are inoperable to extend insurance coverage
beyond the terms of an insurance contract,” the Court’s answer to the second certified question recognized
three significant exceptions to this rule.
1. An insurer is prevented “from asserting a previously unmentioned coverage based defense where
the insurer, or its agent, made a misrepresentation at the policy’s inception that resulted in the
insured being prohibited from obtaining the coverage he/she desired.”
2. Second, an insurer who defends its insured without a reservation of rights may later be estopped
from asserting coverage based defenses or may have waived those defenses: “‘[a]n insurer’s knowledgeable, unconditional conduct of the defense of an action brought against its insured may constitute a waiver of the terms of the policy and an estoppel of the insurer to assert any such grounds.’”
3. Finally, an insurer who acts in bad faith will be required to pay any excess verdict and may also
be liable for punitive damages.
The second exception to the general application of the doctrine of estoppel is the most treacherous for carriers writing policies in West Virginia. To avoid Potesta’s trap, a reservation of rights letter that
preserves all potentially applicable coverage defenses and exclusions should be issued to the insured before
undertaking a defense.
C. Duty to Defend: The Four Corners Just Keep Growing
On its face, West Virginia is a “four corners” state. Historically, this means that the duty to defend is
tested by comparing the policy language to the four corners of the Complaint. As in most states, an insurer’s
duty to defend its insured is broader than its duty to indemnify. See Camden-Clark Memorial Hosp. Ass’n v. St.
Paul Fire and Marine Ins. Co., 224 W.Va. 228, 237, 682 S.E.2d 566, 575 (2009). According to Bruceton Bank v.
U.S. Fid. & Guar. Ins. Co., 199 W.Va. 548, 486 S.E.2d 19 (1997) (citations omitted), “an insurer’s duty to defend
is normally tested by whether the allegations in the complaint against the insured are reasonably susceptible of
an interpretation that the claim may be covered by the terms of the insurance policy.” In Silk v. Flat Top Const.,
Inc., 192 W.Va. 522, 453 S.E.2d 356 (1994), the Court noted that, “an insurer must meet a rigorous standard to
avoid its obligation to defend.”
Many practitioners have observed that West Virginia is moving away from a strict “four corners” test.
In Farmers & Mechanics Mut. Fire Ins. Co. of W. Virginia v. Hutzler, 191 W.Va. 559, 447 S.E.2d 22 (1994), the
Supreme Court ruled that an insurer may not restrict its scrutiny to the allegations in the underlying complaint and must undertake a “reasonable inquiry into the facts” to determine whether its coverage is potentially triggered. See also generally Health Care & Ret. Corp. of Am. v. St. Paul Fire & Marine Ins. Co., 621 F.
Supp. 155 (S.D. W.Va. 1985) (predicting that West Virginia Supreme Court of Appeals would require a liability
insurer to undertake a reasonable investigation of a claim, even where the complaint itself alleges only that the
insured “expected or intended” harm).
Problem Jurisdictions for Insurers: Judicial Hellhole or Almost Heaven... ■ Hall ■ 15
In 2000, the West Virginia Supreme Court of Appeals confirmed that “[w]hen a complaint is filed
against an insured, an insurer must look beyond the bare allegations contained in the third party’s pleadings
and conduct a reasonable inquiry into the facts in order to ascertain whether the claims asserted may come
within the scope of the coverage that the insurer is obligated to provide.” State Auto. Mut. Ins. Co. v. Alpha
Eng’g Servs., Inc., 208 W.Va. 713, 716, 542 S.E.2d 876, 879 (2000) (citation omitted).
West Virginia Regulation §114-14-6.1 requires an insurer to undertake a prompt investigation of
every claim. This investigation normally coincides with a decision on the duty to defend. Reading the “duty to
initiate a prompt investigation” and the duty to undertake a “reasonable inquiry into the facts” together, it is
apparent that the duty to defend is broader than a traditional “four corners” analysis and requires the insurer
to undertake an investigation into the facts.
If part of the claims are covered and part are not, the company must defend the insured against all
of the claims, even if there is no duty (and will never be a duty) to indemnify on those claims. See e.g., Camden-Clark Mem’l Hosp. Ass’n v. St. Paul Fire & Marine Ins. Co., 224 W.Va. 228, 237, 682 S.E.2d 566, 575 (2009).
Moreover, once a defense is undertaken, at least one court has concluded that ethical duties prohibit the attorney from withdrawing without a court order.
An insurer who wrongfully refuses to defend its insured must pay the insured his attorneys’ fees in
defending himself in the underlying claim, and his attorneys’ fees incurred in any coverage action brought to
determine coverage. See Aetna Cas. & Sur. Co. v. Pitrolo, 176 W.Va. 190, 342 S.E.2d 156 (1986). The amount is
determined by reference to twelve factors known as the Pitrolo factors. Annoyance and inconvenience have
not traditionally been recoverable under Pitrolo, although the Fourth Circuit recently ruled that aggravation
and annoyance are recoverable for a breach of the duty to defend. See Graham v. Nat’l Union Fire Ins. Co., 556
Fed. Appx. 193, 2014 U.S. App. LEXIS 2041 (4th Cir. 2014).
The Fourth Circuit, which has historically had a reputation as being among the more conservative
jurisdictions with respect to insurance coverage issues, issued an unpublished, but widely circulated opinion
which held that policy holders may recover damages for “aggravation” and “inconvenience” resulting from
the refusal of an insurer to defend the insured under a liability policy. Id. at 197. In Graham, the Court held
that under West Virginia law “whenever a breach is proved of the insurer’s duty to indemnify (Hayseeds) or
broader duty to defend (Pitrolo), the insured may recover direct damages for attorney fees expended in any
predicate proceeding (usually an adjudication of the insured’s liability to a third party), and also consequential
damages for fees incurred to enforce the policy against the insurer..” Id. Although the West Virginia Supreme
Court of Appeals had distinguished first party claims for coverage under Hayseeds from insureds claims under
an indemnity policy governed by Pitrolo, the Fourth Circuit refused to recognize this distinction, finding that
the insured was bound to suffer the same aggravation and inconvenience regardless of whether the breach was
for the obligation to indemnify or the duty to defend.
D. UM and UIM Offers: Use the Form
West Virginia, insurers are required to offer optional uninsured (“UM”) and underinsured (“UIM”)
motorist coverage. When an offer of optional coverage is statutorily required, an insurer has the burden of
proving that an effective offer was made, and that any rejection of said offer by the insured was knowing and
intelligent. See Bias v. Nationwide Mut. Ins. Co., 179 W.Va. 125, 365 S.E.2d 789 (1987) (citations omitted). If an
insurer fails to prove effective offer and knowing and intelligent rejection by the insured, the statutorily mandated optional coverage is included within the policy by operation of law. Id. at 791.
West Virginia Code §33-6-31d requires that an insurer offer an insured optional UM/UIM coverage on a form prepared by the West Virginia Insurance Commissioner, and states that such form must
16 ■ Insurance Coverage and Practice ■ December 2016
contain the coverage offered, the rate of calculation, all levels and amounts of coverage available, and
the number of vehicles subject to the coverage. Informational Letter 121, issued by the West Virginia Insurance Commissioner, contains Forms for use by insurers in offering UM/UIM coverage. Compliance with the
Forms promulgated by the West Virginia Insurance Commissioner creates a rebuttable presumption that an
insurer’s offer of UIM coverage was effective and the insured’s rejection of such coverage was knowing and
intelligent. See generally Thomas v. McDermitt, 232 W.Va. 159, 751 S.E.2d 264 (2013). However, an insurance
company’s failure to use the Form created by the Insurance Commissioner causes the insurer to lose the statutory presumption of an effective offer contained within Section 33-6-31d, and requires a court to rely on the
standards in Bias. Id. at 278. In layman’s terms, this generally means a jury issue, which is not a good answer
for most carriers.
Informational Letter Number 121 provides the revised, required form and explains the procedures
for making available to a named insured optional UM and UIM coverages. West Virginia Informational Letter No. 121, West Virginia Office of the Insurance Commissioner, July 2000 at 1 (internal quotations omitted).
Informational Letter 121 reiterates that, at a minimum, an insurer’s form must 1) inform a named insured of
the optional coverage offered; 2) inform the named insured of the rate calculation for the optional coverages
including amount of coverage and the number of vehicles; and 3) give the named insured the option to reject
the optional coverage. Informational Letter 121 contains an exemplar form, and states that compliance with
the reproduction of such form is necessary to create a presumption of effective offer of optional coverages. A
knowing and intelligent election or rejection of coverage is achieved only if the reproduced forms contain all
of the information contained within the OIC’s forms.
The forms provided in Informational Letter 121 consist of two parts: an “Important Notice” and
Alternative Forms A and B. The Important Notice must be provided in conjunction with Form A or Form B,
whichever is applicable. Form A applies to split limits liability coverage, whereas Form B is for use by insurers
that offer single limit liability coverage. Id. at 3.
The Important Notice advises the policyholder that UM coverage of at least $20,000 per person,
$40,000 per accident, and $10,000 for property loss is required by the State of West Virginia. Additionally, the Important Notice details the nature of underinsured coverage and states that such coverage is not
required, but must be offered to the insured “at limits as high as your liability coverage.” Id. at 5. The legislature increased the mandatory liability limits to $25,000 per person and $50,000 per accident effective January
1, 2016. Thus, the mandatory offer of UM coverage has increased also.
Forms A and B each contain statements in bold that state the insurer must complete the blank spaces
provided on the forms to “create an effective offer in order for the consumer to exercise a knowing and intelligent selection. The blank spaces on Form A and B are similar, with each requiring the name of the agent, the
number of vehicles, the policy/binder number, the premium number, and an indication whether the insured
selected a level of coverage. Forms A and B both provide for limits up to $350,000, with additional blank
spaces should greater levels of coverage be offered.
IV. So, Where Is the “Almost Heaven” Part?
West Virginia has implemented a series of legislative reforms effort over the past 10 years, including the abrogation of Third Party Bad Faith claims in 2005. These will be discussed in the presentation, but to
highlight a few, the West Virginia Legislature has passed the following statutory reforms since 2015:
1. Reinstatement of the Open and Obvious Doctrine as a defense in premises liability claims.
(W.Va. Code 55-7-27)
Problem Jurisdictions for Insurers: Judicial Hellhole or Almost Heaven... ■ Hall ■ 17
2. Elimination of Joint and Several Liability; Liability is Several Only. (W.Va. 55-7-13a-d)
3. Recovery barred for Plaintiffs who are more than 50 percent at fault. (W.Va. Code 55-7-13a-d)
4. Possessor of real property owes no duty of care to trespasser. (W.Va. Code 55-7-27)
5. In employment claims, a plaintiff now has an affirmative duty to mitigate past and future wage
loss, regardless of the intent of the employer. (W.Va. 55-7E-1, et. seq.)
6. Statutory Caps on punitive damages (greater of 4X compensatory damages or $500,000) with
mandatory bifurcation of punitive phase. (W.Va. Code 55-7-27)
7. Insurance on rented or leased vehicle by firm renting or leasing a vehicle is secondary to the liability of insurance of the person renting or using the vehicle. (W.Va. Code 33-6-29)
8. Strengthening “actual knowledge” requirement under the deliberate intent suits.
9. Enforces Named Driver Exclusions even up to minimum limits of coverage, confirming no duty
to defend or indemnify such driver. W.Va. Code 33-6-31 (h).
We believe that these reforms reflect a trend toward being more predictable and business friendly
by the Legislature. The Court has also expressed an interest in uniformity and predictability, and some of its
opinions reflect this trend, though some, including the recent Stucky decision, appear to reflect a reversal of
course.
V.Conclusion
Insurers dealing with claims in West Virginia should not rely on national or majority positions.
Research how West Virginia courts address coverage issues, coverage grants and exclusions. While I see a
trend toward adopting the majority national position, our Courts have not uniformly embraced this trend.
Often we see two steps forward, and one step back. In addition, be cautious about time limit demands and
tenders of defense by those purporting to be additional insureds by contract or certificate. If plaintiff ’s or
claimant’s counsel makes a tender, ask for authority, review the contracts, the policy endorsements or definitions and even talk with counsel before you make a decision. Once you do make a decision, err on the side of
inclusion in your Reservation of Rights Letter.
Endnotes
1
W.Va. Code § 33-11-6(a) authorizes the Commissioner to order payment of a penalty to the State of West Virginia in
a sum not exceeding $1,000 for each and every act or violation, not to exceed an aggregate penalty of $10,000, unless
the person knew or reasonably should have known he or she violated the Code, in which case the penalty shall not
exceed $5,000 for each and every act or violation, not to exceed an aggregate penalty of $100,000 in any six-month
period. If the act involves an intentional violation of W.Va. Code § 33-11-4(9), under W.Va. Code § 33-11-6(b) the
Commissioner may require payment to the State of West Virginia of a penalty not to exceed $10,000, even if the OIC
has not established that the person engaged in a general business practice. If the Commissioner finds that the committed or performed unfair claims settlement practices with such frequency as to indicate a general business practice,
he or she may order payment to the State of West Virginia of a penalty not exceeding $250,000. W.Va. Code § 33-116(c).
2
W.Va. Code § 33-11-6(d).
3
Restitution is ordered after another hearing wherein the Complainant puts on evidence of damages. Restitution can
be awarded only for actual economic damages and noneconomic damages not to exceed $10,000. Restitution is not
awarded for attorney fees or punitive damages.
18 ■ Insurance Coverage and Practice ■ December 2016