Opinion ID: 1846468
Heading Depth: 2
Heading Rank: 1

Heading: Is Bad Faith in the UIM Context Ill Conceived, and, as Applicable Only to the Insurance Contract Context, Unconstitutional?

Text: National contends, in a conclusory fashion, that the tort of bad-faith failure to pay a claim, because it is applicable only to insurance contracts, is unconstitutional. This Court previously has addressed the constitutionality of this tort; we see no need to revisit that analysis here. See, e.g., United American Ins. Co. v. Brumley, 542 So.2d 1231 (Ala.1989). However, we feel compelled to respond to National's contention, made in reliance upon Quick v. State Farm Mutual Automobile Insurance Co., 429 So.2d 1033 (Ala. 1983), that an insurer and its insured, in the context of a UIM-benefits claim, are in adversarial roles and that, therefore, the insurer cannot be subject to a claim of bad-faith failure to pay, bad-faith failure to properly investigate a claim, or bad-faith failure to submit its insured's UIM claim to a cognitive review. We do not read our holding in Quick v. State Farm Mutual Automobile Insurance Co., supra, to compel such a conclusion, nor do we find any justifiable reason to place an insurer, which normally serves its insured in a fiduciary capacity, into an adversarial role with its insured simply because the insured seeks a particular type of benefit under the policy. In Quick, this Court recognized that until the liability of the uninsured motorist has been determined, the insurer and insured occupy an adversary position toward each other. Quick, 429 So.2d at 1035. Thus, it was because the liability of the uninsured motorist in Quick had not yet been determined that the Quick Court viewed the insurer and the insured as adversaries, not because of the type of benefits being sought. In this case, the liability of the uninsured motorist had been determined before National's September 1998 denial, and National did not dispute that Sockwell's damages exceeded the other insurance coverage available to her. National, at trial, did not dispute that Sockwell was entitled to benefits at the time she was denied benefits in September 1998. Clearly, no adversarial relationship existed between National and Sockwell at the time of the September 1998 denial. Moreover, the duty of good faith arises, not out of the fiduciary relationship existing between an insurer and its insured, but out of the special contractual relationship that exists between those two parties. See Quick, 429 So.2d at 1035 (Torbert, C.J., concurring specially); The Standard Plan, Inc. v. Tucker, 582 So.2d 1024, 1027 (Ala.1991) (discussing Chavers v. National Sec. Fire & Cas. Co., 405 So.2d 1 (Ala.1981)). An insured purchases certain insurance coverage hoping to protect himself or herself against specified losses; the insurer agrees to provide that coverage under certain terms and for a specified premium. We do not view such a relationship as adversarial simply because the insured seeks the benefit of his or her bargain under UIM coverage, as opposed to some other coverage for which the insured has contracted.