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Why it is Time to Abolish the Tort of Bad Faith   

https://zalma.com/blog

It is indisputable that in the 1950\\u2019s, 1960\'s and 1970\\u2019s the insurance  industry abused some insureds to avoid paying legitimate claims. Without  a factual basis, insureds were accused of arson or other variations on  insurance fraud. Indemnity payments were refused on the flimsiest of  excuses. People were found to have diseases that only horses could  catch. Disability payments were refused because an insured was wheeled  in her wheelchair to church one day and, therefore, was not totally  house-confined. Insureds were driven into bankruptcy when reasonable  demands within policy limits were refused.  To stop this abuse, the courts of the state of California invented the  tort of bad faith. It took a universal contract remedy and decided that  the breach of an insurance contract without, what the court decided was  proper, genuine or even fairly debatable reasons, was transferred from a  contract breach into a new tort. Many other states have followed the  lead.  Until the invention of the tort of bad faith all that an insured could  collect from an insurer that wrongfully denied a claim were the benefits  due under the policy. After the creation of the tort of bad faith, the  courts allowed the insureds to collect, in addition, the entire panoply  of tort damages, including punitive damages.  It worked. Insurers treated the insureds better. The threat of punitive  damages made insurers wary of rejecting any claim. The creation of the  tort of bad faith was in many ways a good thing for insurers and  insureds. What the courts that created the tort of bad faith did not  recognize was that it was also the key to Pandora\\u2019s box of abusive  lawyers who found it to be a new profit center for their practices.  Bad faith litigation is not a game, where insureds are free to  manufacture claims for recovery. It is time that it is abolished from  litigation in the United States  \\xa9 2021 \\u2013 Barry Zalma  Barry Zalma, Esq., CFE, now limits his practice to service as an  insurance consultant specializing in insurance coverage, insurance  claims handling, insurance bad faith and insurance fraud almost  equally for insurers and policyholders. He also serves as an arbitrator  or mediator for insurance related disputes. He practiced law in  California for more than 44 years as an insurance coverage and claims  handling lawyer and more than 52 years in the insurance business. He is  available at http://www.zalma.com and zalma@zalma.com.  Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE  Legend Award.  Over the last 53 years Barry Zalma has dedicated his life to insurance,  insurance claims and the need to defeat insurance fraud. He has created  the following library of books and other materials to make it possible  for insurers and their claims staff to become insurance claims  professionals.  Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;   Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry  Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry  Zalma on YouTube-  https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the  Insurance Claims Library \\u2013  https://zalma.com/blog/insurance-claims-library/ Read posts from Barry  Zalma at https://parler.com/profile/Zalma/posts; and the last two issues  of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/