A typical reinsurance dispute is essentially a breach of contract dispute. A reinsurance agreement is a contract between two insurance companies. Tort liability rarely comes into play. Under California law, however, tort liability has been extended in certain disputes between insurers and policyholders. Recently, a California federal court had to address whether tort liability for breach of the implied covenant of good faith and fair dealing was a valid cause of action under California law in a reinsurance dispute.
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