February 4, 2019
States vary widely in the extent to which they credit policyholders’ claims of bad faith in suits alleging wrongful conduct on the part of their insurance companies. In states that look with comparative favor on such claims, the threat of punitive damages or attorneys’ fees gives policyholders vital leverage in insurance coverage disputes. As with many insurance coverage flashpoints, this issue is ground out state by state, and in some periods the wind blows decisively in one direction.
In three cases this past quarter, courts in New Jersey, Kansas and Illinois found that policyholders were entitled to extra-contractual relief because of their insurance companies’ failures in dealing with their policyholders. In a fourth case, the Georgia Supreme Court will decide whether an insurance company’s negligence in response to settlement overtures constitutes bad faith,