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:

Order Fulfillment Department

The division within a company that is responsible for processing customer orders and ensuring they are delivered to the correct address in a timely manner.

Variable Costs

Costs that change in proportion to the level of goods or services produced or sold.

Fixed Costs

Expenses that remain constant regardless of the level of production or sales activity, such as rent, salaries, and insurance premiums.

Variable Service Department Costs

Expenses in a service department that fluctuate in direct proportion to changes in the level of service activity or volume.