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Clearwater v. State Farm Mutual Automobile Insurance Co.5/1/1990
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trial court properly instructed the jury as to the duty and standard of conduct in third-party bad faith claims for failure to accept reasonable settlement offers. We find no error in the trial court's refusal to give State Farm's requested "fairly debatable" instruction in this third-party action.
Conclusion
We hold that in a third-party bad faith claim based on an insurer's refusal to accept a settlement offer within the policy limits, a "fairly debatable" instruction is improper. Such an instruction defines the standard of conduct applicable to first-party claims. The opinion of the court of appeals is vacated in part. We did not grant review of that court's holding that a bad faith claim for punitive damages may properly be assigned. The judgment of the trial court is affirmed.
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