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The 'Daffy Duck' rule in punitive damages cases

When an insurer refuses to provide benefits despite a contractual obligation to do so, an insured may seek a breach of contract claim. This much many insureds instinctively know.  When an insurance company’s denial is unreasonable, it may be guilty of the tort insurance bad faith.

Tortious conduct may entitle the wronged insured to punitive damages.  Punitive damages are intended to punish the defendant and deter future wrongful conduct.  In order to recover punitive damages at trial, the insurance company must be found by “clear and convincing evidence” to be guilty of “malice, fraud or oppression.”  To oversimplify, this translates to bullying, lying or cheating.  You need not prove all three, just one will suffice.  

State courts have held that punitive damages are warranted for “despicable” conduct, leading some to refer to it as the “Daffy Duck rule, ” which is coined after the famous cartoon character’s trademark phrase.

There are strict requirements for making a punitive damage case, generally requiring intentional, willful or conscious wrongdoing.  This conduct is in addition to the unreasonable conduct required for a finding of bad faith.

Anytime an insurer resorts to such tactics to deny a claim, it is unquestionably unfortunate; but it takes a special showing that their actions were truly despicable. An experienced disability law attorney can help you establish a strong case for insurance bad faith that could lead to punitive damages. If you have questions, we invite you to contact us.

The preceding is not intended to be legal advice. 

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