The Tort of Bad Faith in First-Party Insurance Transactions: Refining the Standard of Culpability and Reformulating the Remedies by Statute

This Article explores the common-law and statutory background of the tort of bad faith in first-party insurance situations analyzes the varying standards of culpability that have been developed by the courts and suggests a uniform statutory solution to the problems created by the varying standards. The statute also tailors the remedies more closely to the particular type of insurer wrongdoing. The proposed remedies recognize the dual nature of the insurer-insured relationship, that is, one based upon contract and tort concepts. Such a statute would eliminate many of the ambiguities and other deficiencies in the common law of those states that already have adopted the new tort. In addition, the proposed statutory solution would provide clear guidelines to those states where the courts so far have refused to adopt the new tort or have not faced all of the issues.