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In 2002, the Supreme Court of Canada upheld an award of punitive damages for an insurer's bad faith claims handling, but expressly refused to recognize insurance bad faith as an independent tort under Ontario law, and instead held that when extremely egregious, an insurer's breach of contract becomes an "actionable wrong" (something different ...
The main exception is in insurance bad faith cases in the US if the insurer's breach of contract is alleged to be so egregious as to amount to a breach of the "implied covenant of good faith and fair dealing", and is therefore considered to be a tort cause of action eligible for punitive damages (in excess of the value of the insurance policy).
This rule is most prevalent in insurance law, when the insurer's breach of the implied covenant may give rise to a tort action known as insurance bad faith. The advantage of tort liability is that it supports broader compensatory damages as well as the possibility of punitive damages.
Generally, punitive damages, which are also termed exemplary damages in the United Kingdom, are not awarded in order to compensate the plaintiff, but in order to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff.
State Farm Mutual Automobile Insurance Co. v. Campbell, 538 U.S. 408 (2003), was a case in which the United States Supreme Court held that the due process clause usually limits punitive damage awards to less than ten times the size of the compensatory damages awarded and that punitive damage awards of four times the compensatory damage award is "close to the line of constitutional impropriety".
Insurance bad faith has been broadened beyond use in other fields to include total inaction, a refusal to respond to a claim in any way. [54] Courts can award punitive or exemplary damages, over and above actual damages against any insurance company which is found to have adjusted a claim in bad faith.
Hangarter v. Provident Insurance Company, 373 F.3d 998 (9th Cir. 2004), [1] (UnumProvident, now referred to as Unum or Unum Group [2]), is a landmark decision by the 9th Circuit Court of Appeals on the issue of disability bad faith insurance law. Because California’s bad faith insurance law is often referred to in many states as a model ...
A tort of negligent interference occurs when one party's negligence damages the contractual or business relationship between others, causing economic harm, such as by blocking a waterway or causing a blackout preventing the utility company from being able to uphold its existing contracts with consumers.