H. B. 2720
(By Delegates Azinger, Ashley and Michael)
[Introduced February 24, 1995; referred to the
Committee on Banking and Insurance.]
A BILL to amend article eleven, chapter thirty-three of the code
of West Virginia, one thousand nine hundred thirty-one, as
amended, by adding thereto a new section, designated section
five-a, relating to bad faith actions against insurance
companies.
Be it enacted by the Legislature of West Virginia:
That article eleven, chapter thirty-three of the code of
West Virginia, one thousand nine hundred thirty-one, as amended,
be amended by adding thereto a new section, designated section
five-a, to read as follows:
ARTICLE 11. UNFAIR TRADE PRACTICES.
§33-11-5a. Bad faith actions against insurers.
(a) A cause of action for bad faith arises against an
insurer when the insurer breaches its duty of good faith by
intentionally refusing to satisfy an insured's claim when there
is either:
(1) No lawful basis for the refusal coupled with actual
knowledge of that fact; or
(2) An intentional failure to determine whether there was
any lawful basis for such refusal.
(b) Intent under subdivision (2) of subsection (a) of this
section may be inferred and imputed to the insurer when there is
a reckless indifference to facts or proof reasonably available to
the insurer in considering the claim.
(c) In any action brought against an insurer alleging that
the insurer acted in bad faith, the burden shall be on the
insured to prove the elements of bad faith by clear and
convincing evidence.
(d) If the court finds that the insurer has acted in bad
faith toward the insured, the court may award the following
damages:
(1) Interest on the amount of the claim from the date the
claim was made by the insured in an amount equal to the prime
rate of interest plus three percent; and
(2) Court costs and attorney fees.
NOTE: The purpose of this bill is to define the elements
necessary to prevail in a bad faith action against an insurer,
assign and quantify the burden of proof, and specify what damages
may be recovered.
§33-11-5a is new; therefore, strike-throughs and
underscoring have been omitted.