Posted by H. Lee Pruett
As defense counsel hired by insurance companies to represent their insureds, we are loath to bite the hand that feeds us. Yet that is exactly what it feels like when a plaintiff makes a demand within the liability policy limits and counsel must inform the insured of the bad faith claim they may bring against the insurance company if the company refuses to settle and a subsequent judgment exceeds the limits. What is “bad faith” in this context? And from where does this troubling duty to inform the insured spring?