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What Is The Time for Responding to a Defense Tender?

Insurers must not fail to acknowledge and act reasonably promptly upon notice of claim, Kan. Stat. Ann. § 40-2404(9)(b), but there are no regulations, statutes or case law defining “reasonably promptly.”

Insurers must not fail to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.  Kan. Stat. Ann. § 40-2404(9)(n), but there are no regulations, statutes or case law defining “promptly.”

Does Reserving Rights Create a Conflict of Interest? 

Where an insurer reserves its rights, but does not retain independent counsel, prejudice to the insured can be inferred from an inadequate reservation of rights.  Golf Course Assoc. of Am. v. Underwriters at Lloyds, London, 761 F.Supp. 1485, 1493 (D. Kan. 1991).

Does a Reservation of Rights Create Additional Duties?

None found.

What Must Be Done If A Conflict of Interest Exists?

 Where there is a conflict of interest, the insurer should retain independent counsel and reserve its rights.  Patrons Mut. Ins., Assoc. v. Harmon, 732 P.2d 741, 745 (Kan. 1987).

Who Is Responsible for Fees of Independent Counsel?

No cases found.

What Are Independent Counsel’s Obligations?

No cases found.

What Settlement Duties Exist?

Insurer owes duty to insured to act in good faith and without negligence. Spencer v. Aetna Life, 611 P.2d 149, 155 (Kan. 1980).

What Actions May Result in a Claim for Bad Faith?

Insured may proceed against insurer based on tort of outrage.  Kansas Farm Bur. Ins. Co. v. Miller, 696 P.2d 961, 966 (Kan. 1985).

Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?

In all actions in which judgment is rendered against insurer, and the insurer refused “without just cause or excuse” to pay full amount, judgment shall allow reasonable attorneys’ fees, including appeal.  Kan. Stat. Ann. § 40-256; Evans v. Provident Life & Accident Ins. Co., 815 P.2d 550, 561-562 (Kan. 1991).

Are Punitive Damages Recoverable in Insurer-Insured Dispute?

Punitives are not recoverable in actions against insurer for failure to pay policy benefits or honor its obligations under the contract.  Heinson v. Porter, 772 P.2d 778, 785 (Kan. 1989)(overrule on other grounds).

If the insured can prove that the insurer committed an independent tort with malice, fraud, or wanton disregard for the rights of others, punitive damages may be awarded. Guarantee Abstract & Title Co., Inc. v. Interstate Fire & Cas. Co., Inc., 652 P.2d 665, 667–68 (Kan. 1982).

Alternative Coverage Options

While declaratory judgment action may be maintained though it involves determination of a disputed question of fact, it should not ordinarily be used where question of fact is main issue or where object of action is to try such fact as a determinative issue. States Fidelity Guar. Co. v. Continental Ins. Co., 531 P.2d 9, 11 (Kan. 1975).

Relevant Statutes

Declaratory Judgment – Kan. Stat. Ann.  § 60-1701.

“Courts of record within their respective jurisdictions shall have power to declare rights, status, and other legal relations whether or not further relief is, or could be sought.  No action or proceeding shall be dismissed or stayed fro the sole reason that only declaratory relief has been sought. The declaratory may be either affirmative or negative in form and effect; and such declarations shall have the force and effect of a final judgment or decree.” 

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