Reserve Information Not Relevant to Propriety of First-Party Insurance Coverage Determination

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U.S. District Court for the District of South Carolina

In an action to recover insurance benefits for property damage caused by an explosion, a South Carolina district court denied a plaintiff’s motion to compel disclosure of the insurer’s reserve information.

In Imperial Textiles Supplies Inc. v. Hartford Fire Ins. Co., 2011 WL 1743751 (D.S.C. May 5, 2011), the plaintiff sought benefits under a property insurance policy for damages to the roof of a covered property, and alleged that the insurer acted in bad faith in denying the claim. In response to the plaintiff’s request for production, the insurer produced its claim file, but redacted the specific amounts set for loss reserves.

In denying plaintiff’s motion to compel, the court discussed case law in other jurisdictions and noted that while most courts agree that reserve information is irrelevant in the context of a coverage dispute, courts are split regarding whether reserve information is relevant in an action alleging bad faith....

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