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In a typical contract, one party has a duty to perform (construct a  building, deliver goods, convey real estate, pay indemnity) and the  other party has a duty to pay money or perform a task.  Breach by the  performer may take the form of nonperformance, defective performance, or  delay in performance. 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. Damages should never provide a profit to the non-breaching  party.  Insurance, like all parts of modern society, is subject to the  deprivations of the law of unintended consequences. 

In the USA alone  people pay to insurers more than $1.2 trillion dollars in premiums and  insurers pay out in claims as much or more than they take in. Profit  margins are small because competition is fierce and a year\\u2019s profits can  be lost to a single firestorm, earthquake, hurricane, flood or  unexpected bad faith law suit.  Neither the courts nor the governmental agencies seem to be aware that  in a modern, capitalistic society, a healthy and viable insurance is a  necessity.Not all bad faith suits are certain winners. Not every bad faith suit  results in a punitive damages award. In a first party claim in New  Jersey brought by the insured against its own insurance company the  appellate court conclude that to establish an insurer\'s bad faith, the  insured must demonstrate that coverage was so clear it was not fairly  debatable. If there is a valid question of coverage, i.e., the claim is  fairly debatable, the insurer bears no liability for bad faith.  [Wacker-Ciocco v. Gov\'t Emp. Ins. Co., 439 N.J. Super. 603, 611 (App.  Div. 2015)]. 

Insurers in fear of a potential bad faith judgment, a  plaintiff must show the lack of a reasonable basis for denying the claim  or unreasonably delaying its processing, and the insurer\'s knowledge or  reckless disregard that it was acting unreasonably. [Parko Props., LLC  v. Mercer Ins. Co. of N.J. (N.J. Super. App. Div. 2020)]  Unfortunately, few insurers are willing to take a chance on convincing a  jury that the decision to deny the claim was fairly debatable or that  the decision made was as a result of a genuine dispute. In Louisiana and  Mississippi, for example, multiple millions were paid to settle claims  that flood damage was covered as a result of Hurricane Katrina, although  the policies excluded flood and the plaintiff insureds failed to buy  flood insurance. Mudslides in Southern California from hills denuded by  wildfires, clearly excluded, are being paid because of fear of claims of  bad faith and an aggressive department of insurance that construes a  mudslide as a loss due to fire.  

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