When Insurer Settles Claim Against Insured for Less Than Policy Limits it Fulfills its Obligations Under the Policy
Post 4916
Read the full article at https://lnkd.in/gHuD6iUt, see the full video at https://lnkd.in/gnUkfHjP and at https://lnkd.in/gabuJACD and at https://zalma.com/blog plus more than 4900 posts.
Raymond Kvalvog challenged the dismissal of his claims against his insurer, Secura Supreme Insurance Company. Kvalvog argued that his complaint states a claim upon which relief can be granted because it alleges Secura (1) breached its duty of good faith by failing to inform Kvalvog of his right to withdraw from the liability coverage he invoked and take over his defense, (2) breached its duty of good faith by failing to properly evaluate the claims against Kvalvog, and (3) failed to pay Kvalvog $17,500 in uninsured-motorist benefits.
In Raymond Kvalvog v. Secura Supreme Insurance Company, No. A24-0226, Court of Appeals of Minnesota (October 14, 2024) the Court of Appeals resolved the allegations.
FACTS
After a tragic automobile accident where Kvalvog’s son was driving an automobile as part of a high school athletic trip. The passengers in the automobile included Kvalvog’s other son and Mark Schwandt. As a result of the accident, Kvalvog’s sons died and Schwandt was injured. At the time of the accident, Secura provided automobile insurance coverage to Kvalvog that included liability coverage.
Kvalvog brought a wrongful-death action against, among others, the school and a coach who was driving a different vehicle as part of the school trip only to lose.
Schwandt later commenced a separate action against Kvalvog, the school, the coach, and Schwandt’s own insurer (the underlying action), asserting in part that Kvalvog was liable for Schwandt’s substantial injuries. Kvalvog tendered the defense of the underlying action to Secura, which appointed a lawyer to defend Kvalvog. The case settled with Secura paying less than the policy limits in exchange for a release of all claims against Kvalvog.
The district court granted Secura’s motion reasoning that Secura had the right to settle the claims against Kvalvog, did so within his policy limits.
Kvalvog asserts that his complaint supports three theories of liability, the first two of which are premised on Secura’s claimed breach of its duty of good faith.
The district court granted Secura’s motion to dismiss, determining that Secura did not breach their duty of good faith by settling the claims at mediation within policy limits and that the complaint did not state a viable claim for $17,500 in uninsured-motorist benefits.
DECISION
A complaint is subject to dismissal if it fails to state a claim upon which relief can be granted. Kvalvog’s complaint fails to state a legally sufficient claim that Secura breached its duty of good faith.
An insurance policy, like other contracts, is governed by its terms. But Minnesota law imposes an additional duty of good faith on a liability insurer that assumes control of the right of settlement of claims against its insured. This duty arises because an insured and insurer may have conflicting interests, with an insurer being obligated to represent an insured’s best interests and to defend and indemnify while also wanting settlement at the lowest possible figure. An insurer’s right to control the negotiations for settlement must be subordinated to the purpose of the insurance contract-to defend and indemnify the insured within the limits of the insurance contract
Secura Did Not Have A Duty To Inform Kvalvog That He Could Withdraw From The Coverage He Invoked.
A liability insurer’s duty of good faith springs from the purpose of the insurance contract-to defend and indemnify the insured within the limits of the insurance contract. If an insured is clearly liable the insurer must attempt to settle with the injured party. A liability insurer’s obligations are tethered to a purpose: protecting an insured’s financial interests and ensuring that the insured receives the full benefits it is entitled to under the policy.
Creating the duty advanced by Kvalvog would do the opposite. Such a duty would run counter to an insurer’s other rights and obligations.
Secura Is Not Liable For Any Failure To Investigate.
Kvalvog has not stated a claim for a breach of the duty of good faith on which relief can be granted. Kvalvog’s theories of liability, failing to advise him that he could fire the appointed lawyer, are not viable under Minnesota law.
Kvalvog’s Complaint Fails To State A Legally Sufficient Claim For Uninsuredmotorist Benefits.
Without an identified liability theory, the complaint does not provide fair notice of the basis for Kvalvog’s uninsured motorist claim. It was appropriately dismissed.
ZALMA OPINION
Liability insurance provides for a defense of the insured. It does not, nor should it, provide for the insured’s attempt to gain a judgment against a third party or UM coverage when the responsible party is insured. No good deed was punished – Secura settled the claim against Kvalvog only to be sued for doing what the policy required it to do.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to my substack at https://barryzalma.substack.com/subscribe OR Subscribe to my substack at https://lnkd.in/gmmzUVBy
Go to X @bzalma; Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg
Go to the Insurance Claims Library – https://lnkd.in/gwEYk
The Professional Claims Handler
Post 5218
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-8-barry-zalma-esq-cfe-zdwsc, see the full video at https://rumble.com/v70zl4s-the-zalma-philosophy-of-claims-handling-part-8.html and at https://youtu.be/MIYcF71ffRQ, and at https://zalma.com/blog plus more than 5200 posts.
Claims Commandment X – Thou Shall Not Pretend to be a Lawyer
Some experienced and professional claims people know the law in their area of expertise better than most lawyers.
Adjusters should be adjusters and leave lawyering to lawyers. Similarly, lawyers should be lawyers and never try to be adjusters.
Claims Commandment XI – Thou Shall Empathize With the Claimant
Everyone presenting a claim is unhappy, disturbed, shocked, injured and needs help.
Empathy is identification with and understanding of another’s situation, feelings, and motives. It is the ability to understand another person’s circumstances, point of view, thoughts, and feelings....
HOW TO CREATE AN EXCELLENCE IN CLAIMS HANDLING PROGRAM
See the full video at https://rumble.com/v70wb2i-the-zalma-philosophy-of-claims-handling-part-6.html and at https://youtu.be/tL5nDKPEs40 and at https://zalma.com/blog plus more than 5200 posts.
Post 5217
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
An Excellence in Claims Handling program begins with a statement in the insurer’s claims manual or statement of professionalism that it is dedicated to providing excellence in claims handling to every insured who presents a claim.
The excellence in claims handling program should include, at a minimum:
A series of lectures supported by text materials explaining:
A definition of insurance.
How to read and understand an insurance policy.
How to interview an insured, witness, or claimant.
How to assist an insured in the insured’s obligation to ...
The Professional Claims Handler
Post 5216
Read the full article at https://www.linkedin.com/pulse/zalma-philosophy-claims-handling-part-5-barry-zalma-esq-cfe-jde8c, see the full video at https://rumble.com/v70q4x8-the-zalma-philosophy-of-claims-handling-part-5.html and at https://youtu.be/6b9tZQsEkB4, and at https://zalma.com/blog plus more than 5200 posts.
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry.
Standards to be a Professional Claims Adjuster
The Insurance claims professional should be a person who:
1. Can read and understand the insurance policies issued by the insurer.
2. Understands the promises made by the policy.
3. Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
4. Are competent investigators.
5. Have empathy and recognize the difference between empathy and sympathy.
6. ...
The Professional Claims Handler
Post 5219
Posted on October 31, 2025 by Barry Zalma
An Insurance claims professionals should be a person who:
Can read and understand the insurance policies issued by the insurer.
Understands the promises made by the policy.
Understand their obligation, as an insurer’s claims staff, to fulfill the promises made.
Are competent investigators.
Have empathy and recognize the difference between empathy and sympathy.
Understand medicine relating to traumatic injuries and are sufficiently versed in tort law to deal with lawyers as equals.
Understand how to repair damage to real and personal property and the value of the repairs or the property.
Understand how to negotiate a fair and reasonable settlement with the insured that is fair and reasonable to both the insured and the insurer.
How to Create Claims Professionals
To avoid fraudulent claims, claims of breach of contract, bad faith, punitive damages, unresolved losses, and to make a profit, insurers ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
The History Behind the Creation of a Claims Handling Expert
The Insurance Industry Needs to Implement Excellence in Claims Handling or Fail
Post 5210
This is a change from my normal blog postings. It is my attempt. in more than one post, to explain the need for professional claims representatives who comply with the basic custom and practice of the insurance industry. This statement of my philosophy on claims handling starts with my history as a claims adjuster, insurance defense and coverage lawyer and insurance claims handling expert.
My Training to be an Insurance Claims Adjuster
When I was discharged from the US Army in 1967 I was hired as an insurance adjuster trainee by a professional and well respected insurance company. The insurer took a chance on me because I had been an Army Intelligence Investigator for my three years in the military and could use that training and experience to be a basis to become a professional insurance adjuster.
I was initially sat at a desk reading a text-book on insurance ...
