Ella sued her insurer for bad-faith claim handling after a settlement. The insurer used the defense of

• A. Contributory negligence.
• B. Debatable reasonable basis.
• C. Comparative negligence.
• D. Comparative bad faith.

Answer: (C)

The idea being tested is how fault allocation affects bad-faith claims in settlement decisions. Comparative negligence divides liability among parties based on each party’s degree of fault. When an insurer faced with a bad-faith claim can show that the insured contributed to the loss, the settlement or handling can be seen as appropriate in light of that fault share. In other words, if the insured’s own negligence reduced the overall liability, the insurer can argue there was a reasonable basis for how the claim was settled and handled—undermining the claim of bad faith.

This helps explain why the comparative-negligence defense fits a scenario where the insurer wants to justify its actions by pointing to the insured’s own fault, rather than arguing the insurer acted without a reasonable basis. Other concepts listed don’t align as directly with fault sharing in the settlement context, which is why comparative negligence is the more fitting defense here.