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The Law of Unintended Consequences and the Tort of Bad Faith  

https://zalma.com/blog

 US law was first organized using English common law. When a contract was  breached, only contract damages could be recovered. Tort damages were  limited to tortious conduct and the two categories of damages were  mutually exclusive.  The primary purpose of damages for breach of a contract is to protect  the promisee\\u2019s expectation interest in the promisor\\u2019s performance.  Damages should put the plaintiff in as good a position as if the  defendant had fully performed as required by the contract. Insurance,  like all parts of modern society, is subject to the deprivations of the  law of un\\xadintended consequences. The law can be defined as the  understanding that actions of people\\u2014and especially of government or the  courts\\u2014always have effects that are unanticipated or unintended.  Insurance is controlled by the courts, through appellate decisions, and  by governmental agencies through statute and regulation. Compliance with  the appellate decisions, statutes and regulations\\u2014different in the  various states\\u2014is exceedingly difficult and expensive.  Insurance contracts can be simple or exceedingly complex, depending upon  the risks taken by the insurer. Regardless, insurance is only a  contract whose terms are agreed to by the parties to the contract. Over  the last few centuries almost every word and phrase used in insurance  contracts has been interpreted and applied by one court or another.  Ambiguity in contract language became certain. However, the average  person saw the insurance contract as incomprehensible and impossible to  understand. Ostensibly to protect the public, regulators decided to  require that insurers write their policies in easy-to-read language.  Because they were required to do so by law, insurers changed the words  in their contracts into language that people with a fourth grade  education could understand. Precise language interpreted by hundreds of  years of court decisions was disposed of and replaced with imprecise,  easy-to-read language.