1 New Appleman Insurance Bad Faith Litigation § 1.01

Summary

This chapter considers development of the broad remedies that make insurance bad faith litigation distinctive. It examines traditional limits on contract remedies, notably limits on consequential damages not foreseeable at the time of contracting; the contractual logic for providing broader remedies for breach of the duty to defend than for other insurance contract breaches; and the development of remedies going beyond those previously allowed. In particular, it traces the use of various general tort duties to obtain recoveries for mishandled insurance claims, the development of the insurer’s duty of good faith and fair dealing in settling liability insurance claims against its insured, and the extension of that duty to the handling of claims for the insured’s own losses. Finally, it explains why an insurer is generally held not to be a fiduciary to its insured, even though some aspects of its duties are often said to have fiduciary elements.