Why Are Insurers Liable for Both Compensatory and Punitive Damages

question 49

Multiple Choice

Why are insurers liable for both compensatory and punitive damages for a breach which is in bad faith?

• A)The insured needs to be compensated for the amount spent on the case.
• B)Bad faith is considered an independent tort by itself.
• C)Courts have traditionally favored punitive damages.
• D)Such breaches in bad faith are a very rare phenomenon.

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Definitions:

Spending Variance

A metric that compares the actual cost of production against the budgeted or standard cost, highlighting over or under spending.

Materials

The physical commodities used in the production of goods, ranging from raw materials to fully fabricated components.

Spending Variance

The difference between the actual spending and the budgeted or planned spending amount in a given period.

Medical Supplies

Products and equipment used in healthcare practices for treatment, diagnosis, or preventive care purposes.