A claim of insurer “bad faith” sets off alarm bells for any insurer and its counsel. It brings a whole new field of law into the litigation. Before, the focus was on liability and damages. Once a bad-faith claim is asserted, a tedious examination of the facts and claims handling, beginning with first notice of the loss, is required. This article discusses three types of “bad faith” claims under Louisiana law:
1. claim alleging bad faith based on failure to settle within policy limits;
2. claims of bad faith asserted by third parties; and
3. claims of bad faith based on failure to defend.
Each circumstance is addressed below.