Tennessee “bad faith” law has long held that the statutory “bad faith penalty” set forth in T.C.A. 56-7-105 is not appropriate when the insurer’s refusal to pay rests upon legitimate and substantial legal grounds or when the payment demand is greater than the judgment ultimately recovered.  Tyber v. Great Central Ins. Co., 572 F.2d 562 (6^th Cir. 1978). More and more, we see allegations of “bad faith” made when all that really exists is a simple, but legitimate, disagreement on the cause of loss or the provisions of coverage.  It’s refreshing when a court recognizes this should not constitute “bad faith.”  After all, denial of an insurance claim should not be viewed as a matter of almost strict liability, but rather something more than a mere disagreement.  As one court noted:

there can be disagreements between insurer and insured on a variety of matters such as insurable interest, extent of coverage, cause of loss, amount of loss, or breach of policy conditions…

 without there being “bad faith.” Cole v. Shelter Mut. Ins. Co., 2014 WL 5018591, 2 (W.D.Okla.,2014).  In the case, relying on two roofing evaluations, the carrier denied coverage. The Court noted that their opinion that plaintiff’s roof damage was a:

reasonable and legitimate basis for denying plaintiff’s claim. Further, the fact that plaintiff has a differing opinion about the damage on his roof from an independent roofer is not evidence that defendant acted in bad faith, but is only evidence that there is a legitimate dispute between the parties regarding the damage to plaintiff’s roof. Accordingly, the Court finds that defendant is entitled to summary judgment on plaintiff’s bad faith claim.

Cole, 2014 WL 5018591 at 3.  Three cheers to the Court!