1. Statutory Bad Faith
Both third party claimants and insureds are permitted to bring claims against insurers who violate Montana’s Unfair Trade Practices Act (UTPA). See M.C.A. §33-18-242(1). Under the UTPA insurers have several enumerated obligations which include making prompt settlement offers when liability is reasonably clear. M.C.A. §33-18-201(6). Insurers must also advance pay medical expenses when liability is reasonably clear. See Ridley v. Guaranty National, 286 Mont. 325, 951 P.2d 987 (1997), interpreting M.C.A. §33-18-201(6) & (13). In addition, insurers are required to reasonably investigate all available information related to claims before refusing payment. M.C.A. §33-18-201(4). Punitive damages may be awarded against insurers who violate the UTPA. M.C.A. §33-18-242(4). An insured can bring his action under the UTPA in conjunction with any other action he may have against the insurer M.C.A. §33-18-242(6)(a). Meanwhile, a third party claimant cannot bring his UTPA claim until judgment or settlement is reached in the underlying action. M.C.A. §33-18-242(6)(b).
2. Common Law Bad Faith
By statute, the UTPA prevents an insured from bringing a common law bad faith claim in connection with the handling of an insurance claim. M.C.A. §33-18-242(3); Watters v. Guaranty National, 2000 MT 150, 3 P.3d 626 (2000). The UTPA, however, does not pre-empt a third party claimant’s common law bad faith claims. Brewington v. Employers Fire Insurance Co., 1999 MT 312, 992 P.2d 237 (1999). There does not appear to be any case law or statutory authority that requires a third party claimant to wait until judgment or settlement is reached in the underlying action before they can bring their common law bad faith claim, however the liability of the underlying tort feasor must be established before action can be taken against their insurer. Ulrigg v. Jones, 274 Mont. 215, 907 P.2d 937 (1995).