1 New Appleman Insurance Bad Faith Litigation § 1.02

Summary

As used in this book, insurance bad faith litigation involves any form of substantially expanded insurer liability resulting from improper handling of insurance claims. Literally, insurance bad faith litigation is litigation over an insurer’s alleged breach of its duty of good faith and fair dealing. But that is both overinclusive and underinclusive. In many jurisdictions, breach of that duty is not actionable in tort, leaving only traditional contractual remedies. As will be described, those remedies are often very limited, requiring little of the breaching insurer beyond payment of benefits contractually due, perhaps plus interest. The duty of good faith became significant in cases where it resulted in more extensive remedies for breach, especially the more extensive remedies normal in tort actions. It is those more extensive remedies that are the reason why insurance bad faith litigation is of special interest to both insurers and those seeking recoveries from them. If no special ...