Judicial Interpretation of Insurance Contracts in Maritime Law: The Duty of Good Faith in Handling Claims

The diversity of remedies relating to the breach of the duty of good faith represents a real challenge to the uniformity of maritime law. This paper reviews judicial decisions that focus on bad faith in the claims handling stage. First, however, the current rules controlling uniformity (or, more accurately, dictating lack of uniformity) in the interpretation of marine insurance policies will be reviewed. Second, focus will shift to the diversity of state remedies available. This diversity will be illustrated by identifying representative issues and comparing their treatment under Texas law to their treatment under the laws of California, New York, Louisiana, and other jurisdictions in which the subject matter is particularly well developed. Lastly, the question of whether maritime law should treat bad faith claims uniformly will be raised and answered.