Source: http://www.lexology.com, February 25, 2015
By: William C. Wagner, Taft Stettinius & Hollister LLP
An environmental contamination case resulting in a $3.4 million award for emotional distress and punitive damages due to unfair claims settlement practices by the insurer was recently affirmed on appeal in Indiana Insurance Company v. Demetre, Case No. 2013-CA-338 (Ky. Ct. App. Jan. 30, 2015). In the case, the policyholder sought to insure two pieces of property with Indiana Insurance, in addition to $2.5 million of liability insurance coverage that the policyholder already had with the company. Indiana insurance decided to insure both properties.
Several months later, the policyholder received notice of claims by neighbors related to injuries resulting from contamination of one of the properties and promptly notified Indiana Insurance.  Instead of taking any action to protect the policyholder and investigate the neighbors’ claims, Indiana Insurance appeared to have decided to protect itself and assigned a field investigator to determine whether the policyholder was aware of the loss prior to insuring the property. Approximately two years after receiving the neighbors’ claims, Indiana Insurance sued the policyholder seeking a declaration that it did not owe coverage because the policyholder may have known of the contamination on the property prior to buying insurance.
To learn more about this case, I invite you to read more here.