Since the late 1960s and early 1970s, the United States has seen the growth of direct actions against insurance companies in what have colloquially been termed “bad faith” actions. These actions have arisen from states adopting the common law action of a breach of the duty of good faith and fair dealing and from states allowing a private cause of action under the Uniform Unfair Claims Settlement Practices Act.

Most states allow either the common law cause of action or the statutory cause of action. Many states allow both. Bad faith, as a relatively recent development, however, has always been understood to be a special tort or indeed a “con-tort”—a cause of action based upon an insurance contract that would allow the tort recovery of “extra-contractual” damages separate and apart from a carrier’s policy coverage, based upon a carrier’s poor claims handling or decision-making regarding a particular claim....

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