Class Actions Resulting from COVID Claims and Bad Faith: Part 1
With policies containing different terms and each claim involving different factual scenarios, can policyholders establish a class action claim for bad faith?
In the year following the global outbreak of COVID-19, thousands of businesses have experienced unprecedented financial hardship. It is no surprise that surviving businesses are looking to their insurance policies to recover lost business income incurred as a result of the pandemic. Because every insurance policy contains an implied duty of good faith and fair dealing, which requires that insurers act reasonably in processing, investigating, and paying for insurance claims, policyholders expect that their claim will be handled accordingly. However, insurers have consistently denied many COVID-19 related insurance coverage claims. In some cases, insurers have denied COVID-19 related claims before completing any investigation of the claim.
As a result, many policyholders have filed bad faith insurance claims against their insurers in addition to the standard insurance breach of contract claim. Some of those policyholders have sought strength in numbers and have united to create and certify class actions against their insurers. With policies containing different terms and each claim involving different factual scenarios, can policyholders establish a class action claim for bad faith?
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