APRIL 2016 BAD FAITH CASES: PLAINTIFF WAS NOT AN INSURED UNDER THE POLICY AND SO COULD NOT BRING A BAD FAITH CLAIM (Philadelphia Federal)
In International Management Consultants, Inc. v. Continental Casualty Insurance Company, the plaintiff was a general contractor doing work for a school district. As part of the agreement between the contractor and the school district, the school district was required to purchase Builders Risk Insurance. When the contractor suffered increased costs from the work of one of its subcontractors and/or flooding, it asked the school district to cover those costs, but the school district refused.
The contractor then sought relief against the school district’s insurer, which the insurer refused, as the policy issued to the school district did not encompass the contractor as an insured. The contractor subsequently brought a bad faith claim, among others, against the insurer. The court found that the contractor was not an insured under the policy. As the contractor was not an insured under the policy, it had no standing to bring a bad faith claim against the school district’s insurer.