CAN SECTION 8371 BAD FAITH EXIST WHERE THERE IS NO DENIAL OF A BENEFIT
We posted a case summary yesterday, where the opinion, like many others, indicated that section 8371 bad faith can exist even where no benefit is denied. There are times when the bad faith conduct at issue involves a delay in paying a benefit (or providing a defense), which many courts have equated with the denial of a benefit. However, where there is no denial of a benefit, including no undue delay in providing a benefit, does section 8371 still provide a remedy to the insured for an insurer’s allegedly poor conduct?
We added a Note to yesterday’s post with links to case summaries on the intertwined issue of whether a UIPA violation can be considered in the section 8371 context; whether it can be evidence of section 8371 bad faith, though not in itself bad faith per se; or whether it can be bad faith per se. We likewise observed the related issue of whether the absence of any duty to indemnify automatically eliminates bad faith claims because there is an objectively reasonable basis to deny coverage.
As the issue of section 8371’s remedial scope has come up regularly since the statute’s inception, and as the Supreme Court appeared to address the nature and scope of section 8371 in its 2007 Toy decision, we have just added a link to an article on the subject.
