SB351

Senate Bill 351 creates a new statutory cause of action in tort for policyholders against insurance companies for the breach of an implied covenant of good faith and fair dealing. It defines this covenant as an implied promise in an insurance contract to avoid hindering performance or impairing the benefits and rights expected from the agreement. The bill specifies the criteria for a violation, including failures to conform to industry standards, engaging in unfair settlement practices, or unreasonably denying or delaying valid claims. Plaintiffs would have the burden of proving that a breach resulted from negligence, reckless conduct, or intentional actions by the insurer. Successful plaintiffs could recover compensatory, consequential, and punitive damages. Additionally, the bill provides insurers with an affirmative defense if the specific conduct being sued over is expressly permitted by the terms of the insurance contract.