Insurance Expert Witness On Bad Faith Cases – Part 8

In Negotiating and Settling Insurance Bad Faith Cases , insurance expert witness Guy O. Kornblum of GK Consultants, LLC, writes:

Insurance companies have increasingly relied on what they perceive as an emerging “defense” to their denials or wrongful handling of claims from their insureds: the “good faith dispute.” Initially, this doctrine arose in the context of a genuine coverage dispute, in which the Ninth Circuit advanced the proposition that a “genuine dispute” as to coverage suggests that an insurer acted reasonably. However, the doctrine is greatly overstated by insurance companies, as confirmed by Wilson. Indeed, prior to Wilson, there was a notion in at least one case that the principle was being relied on too heavily, and being misapplied. At least one case has held that even reasonable conduct can expose a carrier to bad faith in certain circumstances.
The cases concede that this doctrine cannot be applied if:
• The insurer is guilty of misrepresentation in handling the claim;
• The insurer’s employees lie during deposition or discovery or to the insured;
• The insurer dishonestly selected its experts;
• The insurer’s experts are unreasonable; or • The insurer fails to conduct a reasonable investigation.