What is tortious interference with an insurance contract?
Tortious interference is an intentional business tort that occurs when a defendant improperly disrupts a contract or a prospective economic relationship between other parties, causing economic harm. In the insurance context, courts have recognized claims where an insurer, its agents, or related actors allegedly induce a breach of an existing insurance-related contract or interfere with a claimant’s expected economic benefit under an insurance relationship.[1][2][3]
What tortious interference is
A standard formulation of the tort, as reflected in the supplied sources, is:
A defendant is liable where it intentionally and improperly interferes with the performance of a contract between two parties by inducing or otherwise causing one party not to perform, or interferes with a prospective contractual or economic relation. [1][3]
The New Jersey Supreme Court formulation for interference with prospective economic advantage requires:
- a protectable interest,
- malice, meaning intentional interference without justification,
- a reasonable likelihood that the interference caused the loss of a prospective gain, and
- resulting damages.[3]
The New Jersey Appellate Division also noted that the Restatement (Second) of Torts recognizes interference with “the opportunity of selling or buying land” as a form of prospective interference.[3]
Cases involving tortious interference with an insurance contract
Below is a non-exhaustive list of cases identified in the supplied materials in which the tortious interference claim arose out of an insurance contract or insurance-related payment/settlement arrangement.
| Case | Court / Citation | Insurance-contract interference issue |
|---|---|---|
| Arieh Israel Insurance Company Ltd v. Kaplansky | Israeli Supreme Court, LCA 2281/05 (Nov. 12, 2007) | Lawyer sued insurer for inducing the insured company to terminate his representation contract so the insurer would make payout. The court addressed whether insurer could be liable for inducing breach of the representation contract tied to the insurance claim. [2] |
| Cross v. American Country Insurance Co., 875 F.2d 625 (7th Cir. 1989) | Seventh Circuit | Listed as a case where attorneys asserted tortious interference after an insurance company settled directly with clients. [1] |
| Edwards v. Travelers Insurance of Hartford, Conn., 563 F.2d 105 (6th Cir. 1977) | Sixth Circuit | Listed as a tortious-interference claim against an insurer in the settlement context. [1] |
| Volz v. Liberty Mutual Insurance Co., 498 F.2d 659 (5th Cir. 1974) | Fifth Circuit | Listed as involving a tortious-interference claim against an insurer. [1] |
| Employers Liability Assurance Corp., Ltd. v. Freeman, 229 F.2d 547 (10th Cir. 1955) | Tenth Circuit | Listed as an insurer-interference case. [1] |
| State Farm Insurance Co. v. Gregory, 184 F.2d 447 (4th Cir. 1950) | Fourth Circuit | Listed as involving interference by an insurer. [1] |
| Liston v. Home Insurance Co., 659 F. Supp. 276 (S.D. Miss. 1986) | S.D. Miss. | Listed as an insurer-interference case. [1] |
| Brunswick v. Safeco Insurance Co., 711 A.2d 1202 (Conn. App. Ct. 1998) | Connecticut Appellate Court | Listed as an insurer-interference case. [1] |
| Ronald M. Sharrow, Chartered v. State Farm Mutual Insurance Co., 511 A.2d 492 (Md. 1986) | Maryland Court of Appeals | Listed as an insurer-interference case. [1] |
| Ross v. Woyan, 439 N.E.2d 428 (Ohio Ct. App. 1980) | Ohio Court of Appeals | Listed as an insurer-interference case. [1] |
| Knell v. State Farm Mutual Automobile Insurance Co., 336 N.E.2d 568 (Ill. App. Ct. 1975) | Illinois Appellate Court | Listed as an insurer-interference case. [1] |
| State Farm Mutual Insurance Co. v. St. Joseph’s Hospital, 489 P.2d 837 (Ariz. 1971) | Arizona Supreme Court | Listed as an insurer-interference case. [1] |
| Fowler v. Nationwide Insurance Co., 124 S.E.2d 520 (N.C. 1962) | North Carolina Supreme Court | Listed as an insurer-interference case. [1] |
| Herron v. State Farm Mutual Insurance Co., 363 P.2d 310 (Cal. 1961) | California Supreme Court | Listed as an insurer-interference case. [1] |
| Keels v. Powell, 34 S.E.2d 482 (S.C. 1945) | South Carolina Supreme Court | Listed as an insurer-interference case. [1] |
| Lurie v. New Amsterdam Casualty Corp., 1 N.E.2d 472 (N.Y. 1936) | New York Court of Appeals | Listed as an insurer-interference case. [1] |
Practical takeaway
The insurance cases tend to arise in two recurring settings:
- Insurer direct-settlement or payment pressure, where the insurer allegedly induces a claimant or insured to terminate or bypass counsel or another contractual relationship.[1][2]
- Interference with settlement or claim handling, where the insurer’s conduct allegedly disrupts a lawyer-client fee arrangement or another economic expectancy linked to an insurance claim.[1][2]
If you want, I can next turn this into a Bluebook-cited research table with each case’s jurisdiction, posture, holding, and whether the tortious-interference claim was sustained or rejected.