Combating the Bad Faith Set-Up In Insurance Litigation

Description

The bad faith set-up is not new. Plaintiffs have long incorporated this into their claim presentations, using the insurance claims as the foundation for aggressive future litigation tactics that target specific insurance policy provisions or an insurance carrier’s approach to specific issues. Fueled by the prospect of substantial damage awards, plaintiffs' attorneys have great incentive to try to maneuver insurance companies into committing acts that may constitute bad faith.

The set-up was traditionally limited to third-party litigations where an insurer refused to settle a tort claim within policy limits within a limited period. The tactic has now shifted to other policy lines, from first-party property insurance claims and an insurer’s handling of matching, appraisal, and calculation of depreciation to employer’s professional liability insurance and diminishing policy limits. The ultimate goal of the plaintiff remains unchanged - to recover substantial extra-contractual damages, including attorneys' fees, where permitted.

Insurers and their counsel must be able to recognize the issues so as to avoid the bad faith set-up. Counsel for claimants and policyholders meanwhile must know the case law, insurer tactics in response, and recent cases that outright reject the concept of the set-up.

Listen as our authoritative panel of insurance practitioners discusses this significant and evolving topic and the high-stakes litigation that often ensues, analyzing recent case law in different states. Our panel will explain the tactics, methods of, and red flags of bad faith set-ups through first-party and third-party scenarios.