In Baldwin v. Standard Fire Ins. Co., 269 N.E.3d 1197 (Ind. 2025), a third-party bad faith case, the Supreme Court of Indiana adopted the "safe harbor" of Section 26 of the Restatement of the Law of Liability Insurance (2019). The Court was using the October 2024 Update on Westlaw, which it erroneously referred to as the "Second" Restatement of the Law of Liability Insurance. Baldwin, 269 N.E.3d at 1206-07.
"[I]nsurers may rely on an interpleader action as a 'safe harbor' that shields insurers from liability to their insureds." Baldwin, 269 N.E.3d at 1207.
The liability insurer at bar filed an interpleader action, deposited its policy limits with the Court, and continued to provide its policyholder with a defense in the underlying liability case, all in the face of its evaluation that one claim among multiple claims against its policyholder would alone likely exceed its policy limits. The Supreme Court affirmed the lower courts' grant of the liability carrier's motion for summary judgment, holding that the carrier cannot be liable for bad faith under these facts. Baldwin, 268 N.E.3d at 1207-08.
The case law is still scanty, but available case law on the Restatement's journey through the Courts is discussed in Volume 1 of the Third Edition of LITIGATION AND PREVENTION OF INSURER BAD FAITH § 3:1 (Thomson Reuters West Publishing Co., with 2025 Supplements). Case law involving insurer bad faith issues and Multiple Claimants including the role of interpleader, is collected in id., § 3:45.
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