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It’s no secret that California permits policyholders to assert either contract or tort remedies for an insurer’s breach of the implied covenant of good faith and fair dealing. Here's what that means for carriers. (Photo: Shutterstock)

It’s no secret that California permits policyholders to assert either contract or tort remedies for an insurer’s breach of the implied covenant of good faith and fair dealing.  The difference between the two remedies, available at the policyholder’s election, is significant; “[i]f the insured elects to proceed in tort, recovery is possible for not only all unpaid policy benefits and other contract damages, but also extra-contractual damages such as those for emotional distress, punitive damages and attorney fees.”[2]  The ability to seek punitive damages, in addition to other potential tort recovery, makes California an attractive forum for policyholders seeking to maximum damages for an insurer’s unreasonable or unjustified denial of policy benefits.[3]

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