Good-Faith Claim Handling Flashcards
Black’s Law Dictionary defines “bad faith”
An insurance company’s unreasonable and unfounded (though not necessarily fraudulent) refusal to provide coverage in violation of the duties of good faith and fair dealing owed to an insured. Bad faith often involves an insurer’s malicious failure to pay the insured’s claim or a claim brought by a third party.
Excess insurer
An insurer that provides coverage for losses above an attachment point, below which there is usually another insurance policy or a self-insured retention.
Excess insurer
An insurer that provides coverage for losses above an attachment point, below which there is usually another insurance policy or a self-insured retention.
Generally, bad-faith claims arise from
Claim or coverage denials
Excess liability claims
Statutory bad faith
Unfair claim settlement practices acts
An excess liability claim generally occurs
The insurer has the opportunity to settle a claim within policy limits, but will not.
If the insured can produce evidence that the claimant would have settled the claim within the policy limits if the insurer had properly handled the claim
Unfair Claims Settlement Practices Act
developed by the National Association of Insurance Commissioners (NAIC)
- many states base their unfair claim settlement practices laws on
Contractual damages
The amounts payable under the contract according to the terms of the contract.
Consequential damages
A payment awarded by a court to indemnify an injured party for losses that result indirectly from a wrong such as a breach of contract or a tort.
Compensatory damages
are a monetary compensation to a victim for harm actually suffered
Punitive damages
damages imposed in order to punish the wrongdoer
Tortfeasor
A person or an organization that has committed a tort.
the advice of counsel defense
For the defense to be successful, some courts require proof of these assertions:
The insurer disclosed all the facts to the lawyer.
The insurer acted or relied on the lawyer’s advice in good faith
Fairly debatable question
Defense that: insurer presents evidence that nearly all insurers would delay settlement given the same facts and claim situation
Comparative Bad Faith Defense
permits dismissal or reduction of a bad-faith claim if an insured failed to deal fairly with the insurer by breaching one or more implied duties
Contributory Negligence defense generally available when?
in states that permit negligence as a basis for a bad-faith claim
