A First-Party Bad Faith breach of contract claim may nonetheless allow for recovery of consequential damages. In New Jersey, for example, it has been held that an insurer's implied contractual duty to act in good faith and to deal fairly in the settlement of claims, under which the insurer is viewed as a fiduciary to a party with whom it has a contract, will allow for the recovery of consequential damages. In particular, the plaintiff seeking recovery of damages in excess of the policy limits must show that the insurance company failed to pay without even a debatably valid reason not to pay, and that the claimed consequential damages were clearly within the contemplation of the insurance contract. Thus, a corporation's "claim for damages for its diminution in value" is a claim which allows for the potential recovery of consequential damages, it has been held, arising out of Title Insurance Carriers' failure to pay claims under Title Insurance Policies.[1]
[1] Walsh Securities, Inc. v. Cristo Prop. Mgt., Ltd., 2012 WL 6053948 *2 (D.N.J. November 28, 2012).
Please Read The Disclaimer.