Here in Oregon with our relative paucity of reported bad faith cases we don’t see too much of it, but in other states insurers can be sued for bad faith for a claim denial, unless the claim’s validity was “fairly debatable” (or a similar standard). Now that it looks like at least for environmental claims we’ll have something like a bad faith claim, this defense will get more play. A recent decision out of Utah came to what seems like a common sense decision about whether a “fairly debatable” defense can be the subject of a carrier-side summary judgment motion. No, said the court in Jones v. Farmers Ins. Exchange – by its nature, there is a factual component to such a defense and it is for the jury. Since carriers usually do not fare so well in jury trials, this kind of approach will hopefully have the result of prompting reasonable settlements, which is good public policy.
