dissenting.
I would direct summary judgment for West Am, as the designated evidence reflects only that West Am delayed payment to Cates while it determined whether its liability to Cates would be reduced by amounts other entities paid to Cates. This an insurer may do so long as it does not act in bad faith. Cates does not argue West Am acted in bad faith and the majority does not so find. I must accordingly dissent.
That insurance companies may, in good faith, dispute claims has long been the rule in Indiana. Erie Ins. Co. v. Hickman by Smith, 622 N.E.2d 515, 520 (Ind.1993). A good faith dispute about the amount of a valid claim or about whether the insured has a valid claim at all will not supply the grounds for a recovery in tort for the breach of the obligation to exercise good faith. This is so even if it is ultimately determined that the insurer breached its contract. Id.
*1023Our Supreme Court noted in Erie that the exercise of the right to- disagree as to the amount of recovery might result in the intentional infliction of “temporal damage,” but this damage is not compensable; the insurer is permitted to dispute its liability in good faith because of the prohibitive social costs of a rule that would make claims nondisputable. Id. By contrast, an insurer who denies liability knowing there is no rational, principled basis for doing so has breached its duty. Id.
In Hopper v. Carey, 810 N.E.2d 761 (Ind.Ct.App.2004), tram, denied 822 N.E.2d 981 (Ind.2004), Hopper was driving a fire truck insured by Continental Insurance when he lost control trying to avoid Carey’s vehicle. The Hoppers sued Carey for negligent driving, Scott County and its contractor for negligent road paving, S & S Fire Apparatus for negligent design of the fire truck, and Continental for coverage as carrier for the Fire Department’s underinsured motorist coverage. The Hoppers alleged Continental’s insurance policy was applicable to their damages because Carey and Scott County were uninsured/underinsured motorists under that policy.
Scott County and its contractor were dismissed. The Hoppers dismissed their claims against S & S then settled with S & S for $750,000.00. The remaining defendants were Carey and Continental. The uninsured/underinsured motorist provision of Continental’s policy provided for $500,000.00 in benefits. Continental moved for summary judgment on the ground it was not liable to the Hoppers under the policy because it was entitled to set-off the Hoppers’ recovery from S & S. The trial court granted Continental’s motion and we affirmed.
The UIM coverage provision in Continental’s policy contained set-off language very similar to that in the case before us: “The Limit of insurance under this coverage shall be reduced by all sums paid or payable by or for anyone who is legally responsible, including all sums paid under this Coverage Form’s LIABILITY COVERAGE.” 810 N.E.2d at 765.
The Hoppers responded to the motion for summary judgment by alleging bad faith in Continental’s handling of the claim. They contended Continental should not have been able to avoid its obligation under the terms of the insurance policy by waiting, as did West Am in the case before us, until the Hoppers’ recovery from other sources exceeded Continental’s liability.
We noted Continental’s delay could be attributed to the necessity of determining the degree of liability of the various parties:
Indeed, whether Carey was an uninsured/underinsured motorist liable for Hopper’s injuries was not undisputed, and had not been determined. Under such circumstances we do not believe Continental can be held to have been acting in bad faith in delaying action on Hopper’s claim for uninsured/underin-sured motorist benefits. For there to have been recovery under the uninsured/underinsured motorist provision, Carey must have been at fault and liable for Hopper’s injuries. Continental had the right to await the determination of whether or not Carey was at fault before being called upon to pay the uninsured/underinsured motorist claim, as there may not have been an uninsured motorist.
810 N.E.2d at 766.
An insurer’s obligation of good faith and fair dealing includes the obligation to refrain from: “(1) making an unfounded refusal to pay policy proceeds; (2) causing an unfounded delay in making payment; (3) deceiving the insured; and (4) exercising any unfair advantage to pressure an insured into a settlement of his claim.” *1024Erie, 622 N.E.2d at 519 (emphases supplied). A good faith dispute about the amount of a valid claim, or about whether an insured has a valid claim at all, will not supply the grounds for recovery in tort for the breach of the obligation to exercise good faith. Id. I would similarly find such a “good faith dispute” does not, as the majority appears to hold, estop an insurer from asserting or even attempting to determine its contractual setoff rights.
I would not characterize as an “unfounded refusal to pay policy proceeds” or an “unfounded delay in payment,” Id., West Am’s decision to wait for Grinnell and Go America “to file declaratory judgment actions to determine whether they owed insurance coverage to [the driver who hit Cates],” slip. op. at 9, when the result of those declaratory actions might determine whether or to what extent West Am might be liable.
Our uninsured motorist laws are remedial in nature and should be construed in favor of the insured. Town & Country Mut. Ins. Co. v. Hunter, 472 N.E.2d 1265, 1269 (Ind.Ct.App.1985), reh’g denied, trans. denied.
However, this concept cannot be taken to the extreme so that claims become nondisputable ... this would result in a prohibitive social cost to the insurance premium paying public. Courts must take care not to discourage honest litigation by allowing punitive damages against a party which is exercising its right to adjudicate a real dispute, even if that party is found to be in error and the litigation injures the other party.
Id.
The majority in the case before us avoids references to “bad faith” or “punitive damages” in describing West Am’s decision to refrain from paying until the setoff amounts were determined, as its result would be unsupportable under either standard. But the majority’s application of estoppel principles to affirm the denial of West Am’s summary judgment motion has much the same effect on West Am and on any other insurer who must now take our decision into account when deciding whether to “exercis[e] its right to adjudicate a real dispute.” Id. I would reverse and direct summary judgment for West Am.
ORDER
On February 28, 2007, the Court handed down its opinion in this appeal marked Memorandum Decisions, Not for Publication. The Appellees, by counsel, have filed a Motion to Publish. The Appellees state that this Court’s opinion satisfies the criteria of Appellate Rule 65(1) and (3), and requests that this Court publish its Memorandum Decision handed down in this appeal.
Having considered the matter, the Court FINDS AND ORDERS AS FOLLOWS:
1. The Appellees’ Motion to Publish is GRANTED and this Court’s opinion heretofore handed down in this cause on February 28, 2007, marked Memorandum Decision, Not for Publication is now ORDERED PUBLISHED.
All panel members concur.