(©2020 Dennis J. Wall. All rights reserved.)
Insurance bad faith defenses are often defined by what they are not.
For example, it has been held that a "reasonably debatable" defense to coverage does not arise because of an appeal which 'debates' a defense to coverage under certain circumstances. One of those circumstances is when the record shows that it is reasonably clear that even without a court interpretation of it, the coverage defense is not reasonably debatable in the first place.
Particularly when the record further shows that the supposed coverage defense should not be used as a reason to deny coverage. See Hayes v. Acuity, No. CIV. 17-5015-JLV, 2020 WL 1322269, at *3-*9 (D.S.D. March 10, 2020) (so holding; remanded for a determination of intent to commit bad faith under South Dakota law under a defense, if any, other than that the coverage provision at bar was reasonably debatable; case involved a worker's compensation carrier).
The Hayes v. Acuity case is discussed along with many other first-party insurance cases addressing Fairly or Reasonably Debatable Claims, in 2 Dennis J. Wall, LITIGATION AND PREVENTION OF INSURER BAD FAITH § 11:17 (3d Edition Thomson Reuters and 2020 Supplements).
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