“The duty of good faith and fair dealing is implied in the insurance contract. We interpret insurance contracts to meet the reasonable expectation of the insured. Therefore, we conclude that the correct view is that the duty of good faith and fair dealing exists at all times, including during the investigation, evaluation and processing of an underinsured motorist claim.
“An insurer may at times have difficulty distinguishing legitimate claims from fraudulent claims, and should not be found to have acted in bad faith for thoroughly investigating a claim if its concerns are reasonable. Although an underinsured motorist carrier may assert all defenses that would be available to the underinsured motorist, the carrier still owes a duty of good faith and fair dealing to its insured during this investigation. An insurance company may ‘”challenge claims which are fairly debatable and will be found liable only where it has intentionally denied (or failed to process or pay) a claim without a reasonable basis.”‘ Radlein v. Indus. Fire & Cas. Ins. Co., 117 Wis. 2d 605, 626, 345 N.W.2d 874 (1984) (quoting Anderson, 85 Wis. 2d at 693).
“In sum we hold the in the underinsured motorist insurance contract there is an implied covenant of good faith and fair dealing between the insured and the insurer. When this duty is breached, and the insured incurs damages as a result of that breach, a claim for bad faith will lie.”
For Appellant: Douglas J. Klingberg, Mary Sue Anderson, Wausau
For Respondent: William A. Schroeder, Rhinelander