Key Takeaway
Roemer v Allstate case analysis examining bad faith insurance claims, covenant of good faith and fair dealing, and consequential damages in New York insurance law.
This article is part of our ongoing bad faith coverage, with 16 published articles analyzing bad faith issues across New York State. Attorney Jason Tenenbaum brings 24+ years of hands-on experience to this analysis, drawing from his work on more than 1,000 appeals, over 100,000 no-fault cases, and recovery of over $100 million for clients throughout Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, and the Bronx. For personalized legal advice about how these principles apply to your specific situation, contact our Long Island office at (516) 750-0595 for a free consultation.
Roemer v Allstate Indem. Ins. Co., 2018 NY Slip Op 05392 (3d Dept. 2018)
(1) “A covenant of good faith and fair dealing is implicit in every insurance contract and encompasses not only any promise that a reasonable promisee would understand to be included, but also that “a reasonable insured would understand that the insurer promises to investigate in good faith and pay covered claims” (New York Univ. v Continental Ins. Co., 87 NY2d 308, 318 ; accord Bi-Economy Mkt., Inc. v Harleysville Ins. Co. of N.Y., 10 NY3d 187, 194 ; see Gutierrez v Government Empls. Ins. Co., 136 AD3d 975, 976 ). In turn, “consequential damages resulting from a breach of the covenant of good faith and fair dealing may be asserted in an insurance contract context, so long as the damages were within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting” (Panasia Estates, Inc. v Hudson Ins. Co., 10 NY3d 200, 203 ; accord Yar-Lo, Inc. v Travelers Indem. Co., 130 AD3d 1402, 1403 ). As relevant here, to establish a prima facie case of bad faith, it must be established “that the insurer’s conduct constituted a gross disregard of the insured’s interests — that is, a deliberate or reckless failure to place on equal footing the interests of its insured with its own interests when considering a settlement offer” (Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 453 ; see Smith v General Acc. Ins. Co., 91 NY2d 648, 653 ). In establishing a claim for bad faith, although not an exhaustive list, “the courts will consider the facts and circumstances surrounding the case, including whether liability is clear, whether the potential damages far exceed the insurance coverage and any other evidence which tends to establish or negate the insurer’s bad faith in refusing to settle”
(2) “Defendant contends that there is no evidence in the record demonstrating that it acted in bad faith or engaged in conduct constituting a gross disregard of its insured’s interests such that it established its entitlement to summary judgment dismissing the complaint. We disagree. In support of its motion, defendant submitted, among other things, a copy of plaintiff’s summons and complaint and plaintiff’s verified bill of particulars. A review of the insurance claim process as set forth therein demonstrates that, the day after plaintiff’s residence was destroyed by fire, plaintiff submitted a standard fire claim form notifying defendant of the loss and defendant thereafter commenced an investigation. While the investigation was pending, defendant advanced plaintiff $5,000 for the removal of debris from the property pursuant to its insurance policy. The Warren County Fire Investigation Office subsequently determined that the cause of the fire was accidental such that there appears to be no dispute that the accident is covered by the insurance policy. Additionally, for the following 12 months, defendant paid plaintiff for additional living expenses in accordance with the terms and coverage limits provided for in its insurance policy. When initial settlement negotiations thereafter proved unsuccessful, plaintiff commenced the appraisal process pursuant to the terms of the insurance policy, and each party thereafter hired their own independent appraiser to determine the amount of loss. In June 2011, the appraisers mutually agreed upon the amount of loss; however, on July 1, 2011 — 16 months after plaintiff’s residence was destroyed by fire — defendant unexpectedly disclaimed coverage on the basis that plaintiff did not have insurable interest in the property.
We find that defendant failed to present any admissible evidence in support of its motion to explain why, after 16 months of investigation (see generally Insurance Law § 2601 ), it only disclaimed coverage after the parties’ independent appraisers had reached a mutual agreement as to the amount of loss incurred. At no point prior to paying plaintiff various benefits to which he was otherwise entitled under the insurance policy, or during settlement negotiations or the appraisal process, did defendant ever indicate to plaintiff that coverage might ultimately be denied because he was apparently not the titled owner of the property — a fact of which plaintiff avers he made his insurance agent aware prior to purchasing the subject policy.
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Legal Context
Why This Matters for Your Case
New York law is among the most complex and nuanced in the country, with distinct procedural rules, substantive doctrines, and court systems that differ significantly from other jurisdictions. The Civil Practice Law and Rules (CPLR) governs every stage of civil litigation, from service of process through trial and appeal. The Appellate Division, Appellate Term, and Court of Appeals create a rich and ever-evolving body of case law that practitioners must follow.
Attorney Jason Tenenbaum has practiced across these areas for over 24 years, writing more than 1,000 appellate briefs and publishing over 2,353 legal articles that attorneys and clients rely on for guidance. The analysis in this article reflects real courtroom experience — from motion practice in Civil Court and Supreme Court to oral arguments before the Appellate Division — and a deep understanding of how New York courts actually apply the law in practice.
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Frequently Asked Questions
What constitutes insurance bad faith in New York?
Bad faith occurs when an insurer unreasonably delays, denies, or underpays a valid claim without a legitimate basis. In New York, bad faith in the no-fault context can include failing to timely pay or deny claims, conducting sham IMEs, or using delay tactics to avoid payment. While New York does not have a standalone bad faith statute for first-party claims, remedies include consequential damages and interest.
What remedies are available for insurer bad faith?
In no-fault cases, remedies include 2% per month statutory interest on overdue claims under 11 NYCRR §65-3.9, attorney fees, and potentially consequential damages. In liability insurance contexts, insurers acting in bad faith may be liable for the full judgment against the insured, even exceeding policy limits.
How do I prove bad faith by my insurance company?
You must show the insurer had no reasonable basis for denying or delaying your claim. Evidence includes the insurer's claims file, the timing and adequacy of their investigation, whether they followed their own procedures, and whether the denial was supported by the medical evidence. A pattern of similar conduct toward other claimants can also be relevant.
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About the Author
Jason Tenenbaum, Esq.
Jason Tenenbaum is the founding attorney of the Law Office of Jason Tenenbaum, P.C., headquartered at 326 Walt Whitman Road, Suite C, Huntington Station, New York 11746. With over 24 years of experience since founding the firm in 2002, Jason has written more than 1,000 appeals, handled over 100,000 no-fault insurance cases, and recovered over $100 million for clients across Long Island, Nassau County, Suffolk County, Queens, Brooklyn, Manhattan, the Bronx, and Staten Island. He is one of the few attorneys in the state who both writes his own appellate briefs and tries his own cases.
Jason is admitted to practice in New York, New Jersey, Florida, Texas, Georgia, and Michigan state courts, as well as multiple federal courts. His 2,353+ published legal articles analyzing New York case law, procedural developments, and litigation strategy make him one of the most prolific legal commentators in the state. He earned his Juris Doctor from Syracuse University College of Law.
Disclaimer: This article is published by the Law Office of Jason Tenenbaum, P.C. for informational and educational purposes only. It does not constitute legal advice, and no attorney-client relationship is formed by reading this content. The legal principles discussed may not apply to your specific situation, and the law may have changed since this article was last updated.
New York law varies by jurisdiction — court decisions in one Appellate Division department may not be followed in another, and local court rules in Nassau County Supreme Court differ from those in Suffolk County Supreme Court, Kings County Civil Court, or Queens County Supreme Court. The Appellate Division, Second Department (which covers Long Island, Brooklyn, Queens, and Staten Island) and the Appellate Term (which hears appeals from lower courts) each have distinct procedural requirements and precedents that affect litigation strategy.
If you need legal help with a bad faith matter, contact our office at (516) 750-0595 for a free consultation. We serve clients throughout Long Island (Huntington, Babylon, Islip, Brookhaven, Smithtown, Riverhead, Southampton, East Hampton), Nassau County (Hempstead, Garden City, Mineola, Great Neck, Manhasset, Freeport, Long Beach, Rockville Centre, Valley Stream, Westbury, Hicksville, Massapequa), Suffolk County (Hauppauge, Deer Park, Bay Shore, Central Islip, Patchogue, Brentwood), Queens, Brooklyn, Manhattan, the Bronx, Staten Island, and Westchester County. Prior results do not guarantee a similar outcome.
