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North Dakota

What Is The Time for Responding to a Defense Tender?

Insurers must acknowledge with reasonable promptness pertinent communications with respect to claims, N.D. Cent. Code § 26.1-04-03. There are no statutes, cases or regulations that further define “reasonable promptly.” 

Insurers must affirm or deny coverage within a reasonable time after proof of loss. N.D. Cent. Code § 26.1-04-03. There are no statutes, cases or regulations that further define “reasonable time.”

Does Reserving Rights Create a Conflict of Interest? 

No cases found.

Does a Reservation of Rights Create Additional Duties?

No cases found.

What Must Be Done If A Conflict of Interest Exists?

In case of a conflict, an insurer may either retain independent counsel of its own choosing or should reimburse the insured for independent counsel of the insured’s choosing. Fetch v. Quam, 530 N.W.2d 337, 341 (N.D. 1995).

Who Is Responsible for Fees of Independent Counsel?

No cases found.

What Are Independent Counsel’s Obligations?

No cases found.

What Settlement Duties Exist?

No cases found.

What Actions May Result in a Claim for Bad Faith?

An insured’s bad faith failure to defend the insured was a tortious breach of the implied covenant of good faith and fair dealing, as well as a contract breach of the contract obligation to defend. Smith v. American Family Mut. Ins. Co., 294 N.W.2d 751, 754 (N.D. 1980).

North Dakota’s Unfair Trade Practices Act governs unfair methods of competition and unfair or deceptive acts or practices, but it is unsettled whether this statute creates a private cause of action for insureds. N.D. Cent. Code § 26.1-04-03.

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

No cases found.

Are Punitive Damages Recoverable in Insurer-Insured Dispute?

Punitive damages are available where malice, wantonness or oppression is proven. Corwin Chrysler-Plymouth v. Westchester Fire Ins. Co., 279 N.W.2d 638, 645 (N.D. 1979).

Punitive damages are limited to double the amount of compensatory damages. N. D. Cent. Code 32-03.2-11(4).

Alternative Coverage Options

A court shall render or enter a declaratory judgment or decree in an action brought by or against an insurance company to determine liability of the insurance company to the insured to defend, or duty to defend, although the insured’s liability for the loss may not have been determined. N.D. Cent. Code § 32-23-06. 

Relevant Statutes

Declaratory Judgment – N.D. Cent. Code § 32-23-02

“A court of record within its jurisdiction shall have power to declare rights, status, and other legal relations whether or not further relief is or could be claimed.  No action or proceeding shall be open to objection on the ground that a declaratory judgment or decree is prayed for.  The declaration may be either affirmative or negative in form and effect and shall have to force and effect of a final judgment or decree.”

Consumer Protection Statute – N.D. Cent. Code § 51-15-01 (1989).

Unfair Trade Practices Act – N.D. Cent. Code § 26.1-04-03.

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