Insurer Bad Faith Set-Up Defense and "Reverse Bad Faith" Claims: Insurer vs. Policyholder Perspectives

In defending bad faith claims, insurers are increasingly using various legal defenses to ensure that the insured's conduct is considered when evaluating the conduct of the insurer. Allegations generally include failure to cooperate, failure to give proper notice of a claim, or fraud and misrepresentation.

A recent Pennsylvania federal court allowed an insurer to proceed with a "bad faith setup" defense, giving ammunition to insurers alleging bad faith tactics by claimants employed solely to obtain punitive damages. At issue was an alleged unreasonably quick settlement deadline and delay tactics by the claimant.

Insurer "reverse bad faith" claims, or allegations that the plaintiff breached the covenant of good faith and fair dealing, have met with limited success by courts. However, there are some reported cases where the claim was recognized at least in dicta, and insurers continue to pursue the claims.

Listen as our authoritative panel of policyholder and insurer counsel discusses the latest litigation trends in defenses raised by insurers in bad faith litigation that focus on the alleged wrongful conduct of the claimant. The panel will cover bad faith set-up, fraud or misrepresentation by the claimant, and the affirmative defense of reverse bad faith.