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Legal Memorandum: Insurer's Relationship with an Insured

Issue: What is the legal relationship of an insured and an insurer under the laws of the Virgin Islands?

Area of Law: Insurance Law
Keywords: Fiduciary relationship; Standard of care to insured
Jurisdiction: Federal, Virgin Islands
Cited Cases: 620 P.2d 141
Cited Statutes: None
Date: 03/01/2005

There is abundant authority holding that an insurer’s relationship with the insured is a fiduciary relationship, or, at least, in the nature of a fiduciary relationship.  See Charleswell v. Chase Manhattan Bank, N.A., 308 F. Supp. 2d 545, 572-73 (D.V.I. 2004); Benke v. Mukwonago-Vernon Mut. Ins. Co., 329 N.W.2d 243, 248 (Wis. Ct. App. 1982).  Closely related to this principle is the notion that the insurer must give “at least as much consideration to the [insured’s] interests as it does its own.”  Egan v. Mut. of Omaha Ins. Co., 620 P.2d 141, 145 (Cal. 1979); see Lozier v. Auto Owners Ins. Co., 951 F.2d 251, 255-56 (9th Cir. 1991).  In other words, the insurer must “exercise the same standard of care [with respect to its insured] that the insurance company would exercise were it exercising ordinary diligence in respect to its own business.”  Benke, 329 N.W.2d at 248.

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