Filed Under:Claims, Litigation

Bad Faith Allegations in Commercial Claims

Reverse Trends with These Tactics

"Bad faith.” If these words were uttered in a pleading in La., Miss., or any other Gulf state prior to the arrival of the now infamous 2004 Florida hurricanes—as well as the 2005 monsters, Katrina and Rita, in Miss. and La.—then the lawyer filing this rare claim in a lawsuit usually made sure he or she had an egregious set of facts to substantiate the claims in the lawsuit.

Further, regardless of how egregious the facts, a defense attorney would, in most cases, read the words “bad faith,” and promptly jump out of his or her chair, picking up the phone immediately to have a nice little conversation with the plaintiff’s lawyer.

A Critique of Current Tactics

Let us assume for the moment (no comments about what “assume” means, please) that insurers are not very fond of being sued for bad faith. It is clear that insurers continue to dispute these claims and defend against them, and yet the claims keep on coming. Consider the staggering impact of these bad faith claims in light of the fact that 3 years after Hurricane Katrina, it was “estimated that between 27,000 and 30,000 hurricane insurance suits were filed in southern Louisiana alone2.”

“Raising the Ceiling” in Settlement Negotiations

The insured and savvy insured’s attorney may have alleged bad faith to “raise the ceiling” in its settlement negotiations. “Raising the ceiling” is a negotiation tactic used by plaintiffs to increase the defendants “worst case scenario” settlement amount (“ceiling”).

Bad Faith Claims Subsequent to Appraisal Awards

To say that Fla. is also a “hot spot” for bad faith litigation would be quite an understatement. Add to that the growing bad faith litigation in Florida involving appraisal awards, and you have a subject for another article entirely.  

Chairs Must Fall Again

As you can see from just these few areas, commercial defendants are facing bad faith claims that are increasing and expanding, and it does not appear that the current defense, tactics are working. 

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