Considering Alternatives To Reverse Bad Faith Claims

By Paul Ferland (November 27, 2017, 12:04 PM EST) -- While an insured's claim against its insurer for bad faith is recognized in most jurisdictions, there is no corresponding recognition for a "reverse bad faith" claim by an insurer against its insured. As a concept, "reverse bad faith" is an action by an insurer against its insured "when the insured willfully submits a fraudulent claim and then sues the insurer in tort for the insurer's 'bad faith' in refusing to pay the fraudulent claim."[1] However, even after considering the public policy reasons for allowing a reverse bad faith claim, and acknowledging wrongdoing by insureds, courts have been unable, or unwilling, to take the next step, and recognize a "reverse bad faith" cause of action. This article analyzes courts' reasons for refusing to accept "reverse bad faith" claims, and alternatives to a "reverse bad faith" claim....

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