Third Party Bad Faith
Historically, the tort of bad faith was limited to first party relationships because there was a contractual relationship between the parties. The third party claims were first considered when the failures of the insurer involved the insured to the insured’s detriment. Over time, that expanded further to include the third party claimants. There are many cases which set forth criteria for determining whether a carrier acted in bad faith in handling the settlement of a third party claim.
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