Insurers locked in a coverage fight with a policyholder should refrain from asserting a "reverse bad faith" claim, a panel of attorneys said in a webinar Tuesday, explaining that a vast majority of courts do not recognize it as a viable cause of action.
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Mark Garbowski of Anderson Kill PC said one reason courts may reject reverse bad faith claims stems from the time discrepancy that favors an insurer from the time it issues a policy until the time a claim is filed. Jurists may also believe that insurers have a higher duty to a policyholder after receiving a claim.
Garbowski went on to say that while an insurer's use of a reverse bad faith claim is a way to intimidate policyholders, it does not give insurers carte blanche to engage in conduct that sets up a bad faith claim.
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