Insurers may at times exploit the delay inherent in the civil litigati
on process to induce needy insureds to settle for less than the amount
that the contract promises. The prospect of extracontractual remedies
for such ''bad faith'' at the end of the litigation process can make
these tactics unprofitable and thus serve a potentially valuable funct
ion. But the remedy may be worse than the problem, as the courts seem
to find bad faith on the part of insurers who have genuine and reasona
ble disputes with their policyholders over the terms of the policy or
over factual issues essential to the insured's right to recover. The a
bility of the courts to identify opportunistic behavior accurately is
thus in doubt, and the possibility arises that bad faith doctrine in f
irst-party cases does little to police misconduct while doing much to
cause uneconomic increases in the premiums that policyholders must pay
.