Deck 18: Bad Faith

Question 1

A judgment greater than the insured's policy limits is called a(n) judgment.

Answer 1

excess

Question 2

The reasonable expectations doctrine is no longer utilized by the courts in interpreting standardized contracts.

Answer 2

False

Question 3

The modern-day rule regarding interpretation of contracts is described as the doctrine.

Answer 3

reasonable expectations

Question 4

When an insurer denies coverage to a claim made against the insured, the insured's duty to cooperate with the insurer is not terminated.

Question 5

When an insurer provides a defense but does not accept coverage, it is said to be defending the insured under a .

Question 6

Bad-faith claims are allowed only in third-party situations.

Question 7

If the insurer's actions are egregious enough, the insurer might be liable for damages in addition to damages for breach of contract and bad faith.

Question 8

Ambiguities are usually construed against of the contract.

Question 9

An adhesion contract is a contract negotiated between parties of equal bargaining power.

Question 10

An excess judgment is a judgment obtained in an amount greater than the applicable policy limits.

Question 11

Bad faith is considered a(n) tort.

Question 12

It is unlawful in most states for an insured to assign his or her rights against his or her insurer to the injured party.

Question 13

The winner of a declaratory judgment action will get provable damages in addition to attorneys' fees and court costs.

Question 14

If the insurer defends the insured under a reservation of rights, the insured is no longer obliged to cooperate with the insurer.

Question 15

A standardized contract characterized by unequal bargaining power and lack of negotiation ability is called a(n) contract.

Question 16

The tort of bad faith generally applies to claims made by both and party claims.

Question 17

The test to be used in measuring the insurer's action in first-party bad-faith claims is the standard.

Question 18

Bad faith can occur in only one way.

Question 19

An action to determine whether coverage exists with respect to a particular incident, but for which no damages will be awarded, is called a action.

Question 20

The standard to be used in third-party bad-faith claims is the test.

Question 21

What is the difference between a breach of contract claim and a bad faith claim?

Question 22

Under what circumstances might it be appropriate to bring a declaratory judgment action?

Question 23

Against whom are ambiguities in a contract construed?

Question 24

Who issues a reservation of rights?

Question 25

If an insurer is found guilty of bad faith, the insurer will also be liable for punitive damages.

Question 26

How does a reservation of rights differ from a denial of coverage?

Question 27

An insured's bad faith claim with respect to UM coverage is subject to compulsory arbitration as required in the insurance contract.

Question 28

What does "fairly debatable" mean in the context of bad faith?

Question 29

What is the difference between a third-party claim and a first-party claim?

Question 30

Give an example of an adhesion contract.

Question 31

In every case where a judgment against the insured is entered in excess of the insured's policy limits, the insured will have a claim against his or her insurer for bad faith.

Question 32

Describe two ways in which an insurer can act in bad faith.

Question 33

What are three of the damage factors utilized in evaluating a first-party bad faith claim?

Question 34

What are three of the damage factors utilized in evaluating a third-party bad faith claim?

Question 35

In order for an insurer to be guilty of bad faith, it must be guilty of more than mere negligence.

Question 36

When does the reasonable expectations doctrine apply to adhesion contracts?

Question 37

Does an excess judgment always indicate bad faith on the part of the insurer? Why or why not?

Question 38

In a first-party bad faith claim, the insured can recover only the unpaid benefits of the policy.