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Comparative Fault and Insurance Bad Faith

Ellen S. Pryor

UNT Dallas College of Law


Texas Law Review, Vol. 72, p. 1505, 1994

This Article examines the topic of comparative fault in insurance bad faith settings. In the 1980s and 90s, most states adopted a tort or extracontractual remedy for insurer bad faith in first-party or third-party insurance contexts. Courts and scholars now have begun to consider whether to adopt a comparative fault defense for the insured’s own conduct. The Article explores whether a comparative fault defense is even necessary. As it turns out, the case for the defense is more complicated and less compelling that one might at first expect. A comparative fault defense would not displace contract defenses; rather, it would be an overlay on those defenses. Thus, the comparative defense warrants adoption only if its marginal benefits outweigh the marginal costs of adding a tort defense to contract defenses that will be relevant in any event. This comparison varies depending on the shape of a jurisdiction’s bad faith doctrine. For instance, a comparative defense is not warranted when bad faith, though termed a “tort,” essentially allows only damages that fit a contract model. In addition, the case for a comparative defense is weak when the insured’s ability to recover for bad faith is closely linked to the insured’s ability to recover on the contract; in such cases, the contract defenses would capture most insured conduct that would be relevant to the bad faith claim. The Article then discusses a number of unsettled or unexplored issues about how a comparative fault defense should operate if a jurisdiction adopts it. These issues include coordinating the comparative fault defense with contract defenses, and applying the comparative defense in multi-party and multi-theory claims.

Number of Pages in PDF File: 60

Keywords: insurance, first-party insurance, liability insurance, bad faith, comparative fault

JEL Classification: K13, K41

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Date posted: May 13, 2010 ; Last revised: August 8, 2010

Suggested Citation

Pryor, Ellen S., Comparative Fault and Insurance Bad Faith (1994). Texas Law Review, Vol. 72, p. 1505, 1994. Available at SSRN: https://ssrn.com/abstract=1605353

Contact Information

Ellen S. Pryor (Contact Author)
UNT Dallas College of Law ( email )
1901 Main Street
Dallas, TX 75201
United States
(214) 752-5959 (Phone)
HOME PAGE: http://www.untsystem.edu
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