In Negotiating and Settling Insurance Bad Faith Cases , insurance expert witness Guy O. Kornblum of GK Consultants, LLC, writes:
CAN YOU CONVERT THE CONTRACT CLAIM TO A TORT CLAIM?
It is obvious from the above that either using traditional tort principles or those requisites for the tort of insurance bad faith, it is critical to the recovery of extra-contractual damages to convert the contract claim to a tort. This requires going outside the four corners of the contract and examining carefully the conduct of the insurer in administering and managing the claim.
Requirement of Financial Loss
Past cases have discussed the question of whether the claim for insurance bad faith is a personal injury or economic claim (i.e., property claim). Decisions have generally described it as the latter. As a result, financial injury must occur before there can be an award for emotional distress. Such a requirement is said to reduce the danger of frivolous or fictitious claims.
Recovery of Damages for Emotional Distress
As a general proposition, the requirement of financial injury provides verification of an accompanying claim for emotional distress. As one California Court of Appeal stated:
The principal reason for limiting recovery of damages for mental distress is that to permit recovery of such damages would open the door to fictitious claims, to recovery for mere bad manners, and to litigation in the field of trivialities.... Obviously, where, as here, the claim is actionable and has resulted in substantial damages apart from those due to mental distress, the danger of fictitious claims is reduced, and we are not here concerned with mere bad manners or trivialities but tortious conduct resulting in substantial invasions of clearly protected interests.