AR SB351

Creates a new tort cause of action for policyholders to sue insurers for violating an implied covenant of good faith and fair dealing under Arkansas Code Title 23, Chapter 66, Section 216.

Defines the implied covenant as a promise to avoid acting in ways that prevent, hinder, or delay performance of an insurance contract, or conduct that impairs expected benefits or contractual rights.

Requires plaintiffs to prove by preponderance of evidence that the violation resulted from negligence, reckless conduct, or intentional actions, and allows recovery of compensatory damages, consequential damages, and punitive damages (if proven by clear and convincing evidence).

Identifies eight specific insurer behaviors constituting breach of the covenant, including failing to conform to industry standards, engaging in unfair claims practices, refusing valid claims, altering evidence, unreasonably withholding payment, asserting invalid defenses, misrepresenting coverages, and unreasonably delaying or denying payment.

Provides insurers an affirmative defense if express contract terms permit the conduct in question, and mandates liberal construction of the section to effectuate its remedial purposes.