Bad Faith Insurance Law
Bad Faith Insurance Laws are those state laws and regulations that are designed to protect consumers from unethical practices by insurance companies. Examples of bad faith insurance claims include refusal by the insurance agency to pay a claim in compliance with the insurance policy and delays in the processing of a claim.
Bad Faith, Generally
In general terms, bad faith is the fraudulent deception of another person; the intentional or malicious refusal to perform some duty or contractual obligation. One can make a true mistake about their rights and responsibilities, but when the rights of someone else are intentionally or maliciously infringed upon, such conduct may constitute bad faith. It is the opposite of the legal concept of “Good Faith,” the observance of reasonable standards and fair dealings.
Effect of Bad Faith
A judicial finding of bad faith can reduce or nullify any claims that an individual alleges in a lawsuit. Punitive Damages, attorney fees, or both, may be granted to a party who must defend himself or herself in an action brought in bad faith. Similarly, in jurisdictions recognizing bad faith as a separate cause of action, punitive damages, attorney fees, or both may be awarded to the prosecuting party.
Insurance Bad Faith
Insurance bad faith describes a tort claim that an insured individual may bring against an insurance company for its bad acts. In most jurisdictions in the United States, the law provides that insurance companies owe a duty of good faith and fair dealing to those they insure. This obligation is often referred to as the "implied covenant of good faith and fair dealing" which exists by operation of law in all insurance contracts. If an insurance company violates that covenant, the insured policyholder may bring an action against the insurance company on a tort claim in addition to a standard breach of contract claim. The outcome is that a plaintiff in an insurance bad faith case may be able to recover an amount greater than the initial face value of the policy if the insurance company's conduct was particularly intentional or malicious.
For more information on insurance bad faith, please refer to the materials below. Additionally, you can find an attorney on our Law Firms page that specializes in personal injury and bad faith insurance claims in your area.
Know Your Rights!
Bad Faith Insurance Law - US
- ABA - Tort Trial and Insurance Practice Section (TIPS)
Welcome to the ABA Tort Trial & Insurance Practice Section (TIPS)—the source of knowledge and leadership on trial practice and critical issues of justice that involve tort and insurance law. There are numerous benefits of TIPS membership. We invite you to explore these resources and join the TIPS family today.
- Bad Faith - Overview by IRMI
A term describing blatantly unfair conduct that exceeds mere negligence by an insurance company. For example, a bad faith claim may arise if an auto liability insurer arbitrarily refuses to settle a claim within policy limits, where an insured's liability is incontrovertible. Bad faith damages, also known as extracontractual damages, are often substantial. They frequently exceed the limits of the insurance policy that is the subject of the claim.
- Bad Faith Insurance - Definition
Insurance bad faith is a legal term of art that describes a tort claim that an insured person may have against an insurance company for its bad acts. Under the law of most jurisdictions in the United States, insurance companies owe a duty of good faith and fair dealing to the persons they insure. This duty is often referred to as the "implied covenant of good faith and fair dealing" which automatically exists by operation of law in every insurance contract. If an insurance company violates that covenant, the insured person (or "policyholder") may sue the company on a tort claim in addition to a standard breach of contract claim. The contract-tort distinction is significant because as a matter of public policy, punitive or exemplary damages are unavailable for contract claims, but are available for tort claims.
- McCarran-Ferguson Act
The Act entitled “An Act to express the intent of Congress with reference to the regulation of the business of insurance” and approved March 9, 1945 (15 U.S.C. 1011 et seq.) (commonly referred to as the “McCarran-Ferguson Act”) remains the law of the United States.
Organizations Related to Bad Faith Insurance Law
- American Council of Life Insurers (ACLI)
The American Council of Life Insurers (ACLI) represents more than 300 legal reserve life insurer and fraternal benefit society member companies operating in the United States. These member companies represent more than 90% of the assets and premiums of the U.S. life insurance and annuity industry.
- American Insurance Association (AIA)
The American Insurance Association (AIA) is the leading property-casualty insurance trade organization, representing approximately 300 insurers that write more than $117 billion in premiums each year. AIA member companies offer all types of property - casualty insurance, including personal and commercial auto insurance, commercial property and liability coverage for small businesses, workers' compensation, homeowners' insurance, medical malpractice coverage, and product liability insurance.
- Council of Insurance Agents and Brokers
The Council of Insurance Agents & Brokers is the premier association for the top national, regional and international commercial brokerage firms and agencies in the United States and around the world. Member firms have offices in more than 3,000 locations across 100 countries. Council members place more than $200 billion in commercial property/casualty and employee benefits premium worldwide. More than 16 percent of the membership is comprised of firms headquartered outside the United States. Founded in 1913, The Council is based in Washington, D.C.
- Fight Bad Faith Insurance Companies (FBIC)
Bad faith (BF) insurance companies non-payment of claims practices are proven to be pervasive and widespread. The overwhelming majority of insurers are bad faith (BF) insurers that repeatedly and consistently break the law, and state regulators have been for decades and are covertly pro-insurers and anti-claimants FBIC struggles to identify Good Faith (GF) insurance companies from the remaining few and much smaller number of insurers as the overwhelming number of consumer complaints exceed one million + annually. Bad Faith (BF) insurers are estimated to reach upwards of 80%-90% of insurers in many circumstances
- Insurance Risk Management Institute (IRMI)
At IRMI, our mission is to be the premier authority in providing expert advice and practical strategies for risk management, insurance, and legal professionals. We will continuously earn our customers’ trust and confidence by empowering them with the most reliable and accurate information, maintaining the highest levels of integrity in all that we do, and quickly responding to their needs.
- National Association of Insurance Commissioners
The mission of the NAIC is to assist state insurance regulators, individually and collectively, in serving the public interest and achieving the following fundamental insurance regulatory goals in a responsive, efficient and cost effective manner, consistent with the wishes of its members:
- National Conference of Insurance Legislators (NCOIL)
The National Conference of Insurance Legislators (NCOIL) is an organization of state legislators whose main area of public policy concern is insurance legislation and regulation. Many legislators active in NCOIL either chair or are members of the committees responsible for insurance legislation in their respective state houses across the country.
- National Insurance Law Forum
National Insurance Law Forum is a public service intended to facilitate discussion and an exchange of ideas and information among insurance industry professionals, risk managers, attorneys, policyholders, students, and others with an interest in the development of American insurance law. Members of the Forum are attorneys who concentrate their practice in insurance and bad faith law and litigation.
Publications Related to Bad Faith Insurance Law
- ABA - Insurance Claims and Issues
This blawg addresses issues related to insurance coverage and to the duties of good faith and fair dealing as presented in claims and as ruled on by courts across the nation.
- Insurance Information Institute
The mission of the Insurance Information Institute (I.I.I.) is to improve public understanding of insurance -- what it does and how it works. For more than 40 years, the I.I.I. has provided definitive insurance information. Today, the I.I.I. is recognized by the media, governments, regulatory organizations, universities and the public as a primary source of information, analysis and referral concerning insurance.
Articles on HG.org Related to Bad Faith Insurance Law
- 15 Things You Should Know about Your Life Insurance Policy and Life Insurance ClaimsA life insurance company got a letter from an elderly lady. It read, “I’m sorry, but I have to cancel my husband’s life insurance policy. He died last year and I cannot afford to continue paying his premiums.” Joking aside, life insurance companies often look for reasons not to pay claims whenever possible.
- How an Insurance Attorney Can Help a Public AdjusterBy working together on litigating insurance claims, public adjusters and attorneys can obtain beneficial outcomes for their client. In their partnership, each will use their unique skill set to recover the maximum possible compensation for the claimant.
- Long Term Disability ("LTD") Appeals and Lawsuits -- Frequently Asked QuestionsIf your claim for Long Term Disability ("LTD") benefits has been denied or terminated, this article may answer some of your questions and concerns.
- Understanding Bad Faith Claims Against Insurance CompaniesInsurance bad faith, also known as “insurance fraud" is the term used to describe the mistreatment of consumers and businesses by insurance carriers. It usually applies to situations in which an insurance company refuses to pay out a settlement pursuant to the terms of its insurance contract with the person or entity they claim to insure.
- Flood Preparedness Safety ChecklistDid you know that floods are the number one most common natural disaster in the United States? Here are some tips to stay safe before, during and after flood storms.
- South Florida 2013 Hurricane Preparedness TipsIt’s time for everyone along the east coast to ready their Hurricane Preparedness Plan, and the law firm of Panter, Panter & Sampedro, P.A. have prepared some tips to help prevent unnecessary injuries and damage to property.
- Five Most Common Bad Faith Insurance PracticesFirst party bad faith deals with claims made by policyholders and covers a wide range of transgressions. Here is an overview of the five most common.
- 10 Bad Faith Insurance Claim PracticesLearn about some common bad faith insurance claim practices. If you are dealing with a denied claim after unfair practice, get legal help from a Denver attorney.
- Life Insurance Claims in North CarolinaThis Article addresses life insurance claims in North Carolina, and some issues that frequently arise in these claims, including whether the death is accidental, and whether the insured made a misrepresentation in the policy application. Life insurance claims in North Carolina are governed by the policy itself, state statutes, and sometimes federal ERISA laws.
- Obtaining Long Term Disability Benefits for Mental Health IssuesDepression, bipolar disorder and post-traumatic stress disorder (PTSD) are three similar mental illnesses with defining symptoms and characteristics. People afflicted by these mental health issues are often times unable to work, making it difficult to pay bills and other expenses. In this article, we detail the challenges people face while trying to obtain long term disability benefits.
- All Insurance and Reinsurance Law Articles
Articles written by attorneys and experts worldwide discussing legal aspects related to Insurance and Reinsurance including: bad faith insurance, insurance defense, insurance fraud and medical insurance.