Insurance company executives, claims personnel, and their lawyers see liability for bad faith as a threat to the claim process.
The fear of liability for damages beyond the policy limits can undermine their efforts to pay claims fairly and to deny unjustified or fraudulent claims; moreover, payment of excessive damages to a few claimants raises premiums for all policyholders. Policyholder advocates, on the other hand, see bad faith litigation as a needed corrective to instances when insurance companies wrongfully delay payment of claims, deny valid claims, or force policyholders to litigation to get the benefits to which they are entitled.
The debate over bad faith can get heated, but one thing is clear: New conceptions of bad faith are coming to the fore.
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