Hawaii Claims Handling & Insurance Bad Faith

Best Place established Hawaii’s first-party bad-faith tort

In Best Place, Inc. v. Penn America Insurance Co., 82 Hawaiʻi 120, 920 P.2d 334 (1996), the Hawaii Supreme Court recognized a cause of action in tort for an insurer’s breach of the implied covenant of good faith and fair dealing. The court explained that an insurer must act in good faith in dealing with its insured and that bad faith can exist independently of a separate breach-of-contract award.

Unfair-claims standards remain distinct

HRS § 431:13-103(a)(11) defines unfair claim settlement practices when they occur with sufficient frequency to indicate a general business practice. Those statutory standards inform insurer conduct, but they should not be conflated with the elements of the common-law bad-faith tort.

Build a claim chronology

• date the loss was reported
• acknowledgment and assigned adjuster
• requests for records and responses
• coverage investigation
• reservation or denial letters
• medical, wage and damages submissions
• offers, demands and deadlines
• undisputed payments
• reasons given for delay or denial
• changes in insurer position

A disputed claim is not automatically bad faith

The legal focus is not simply whether the insured disagreed with the insurer. Preserve the factual and legal basis the insurer asserted, what information was available at the time, whether material evidence was ignored, and whether the insurer reassessed its position when new information arrived.

Authority map

Best Place, Inc. v. Penn America Insurance Co., 82 Hawaiʻi 120 (1996). Foundation of Hawaii’s common-law first-party insurance bad-faith cause of action.

HRS § 431:13-103(a)(11). Statutory unfair-claims-practices standards, kept analytically separate from the common-law tort.