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!
Articles on HG.org Related to Bad Faith Insurance Law
- Private Investigators and Insurance CasesOne of the most common reasons that private investigators are hired is to assist with insurance cases. In many cases, they try to uncover whether a fraudulent insurance claim has been filed. They do this by conducting an investigation and employing other investigative techniques.
- Severe Weather Incidents in Texas Spur Record Insurance Claims by Home and Property OwnersThe state of Texas experiences more instances of high winds, hail storms, tornadoes, flooding, and other extreme weather events than any other state in the U.S. Although insurance offers home and property owners some protection from damage caused by extreme weather, many homeowners may be vulnerable due to coverage exclusions or bad faith actions by an insurance company.
- Insurance Claims for Hail DamageWhile hail can cause extensive damage to a home, hail damage claims may not be easy claims to have accepted. Homeowners may run into difficulties with claims and compensation for payments that they have already made to repair the damage. Because hail damage is often unnoticed when looking at the roof from below, a professional with experience in hail damage is needed.
- When Do I Need a Califronia Insurance Coverage Attorney?Individuals and business interests in San Diego are often denied coverage under valid insurance policies. The first question to be answered is: “Does the coverage in my policy cover the specific circumstances of my claim?” The second question to be answered is: “Is the insurance company acting in good faith with respect to my policy claim?”
- What Constitutes Insurance Bad Faith in California?What constitutes insurance “bad faith” in California? What can a policy holder do to hold an insurance company responsible and accountable for the protections of a valid policy? California insurance law is quite complex, and a policy holder should never attempt to interpret or take action against an insurance company without strong legal advice and representation.
- Tips for Handling Insurance Companies after an AccidentWhen a person is injured in an accident, he or she may have to submit a claim to the relevant insurance company. Many times, this process can be long and confusing. This situation is exacerbated when the victim is trying to recover from the accident.
- What Is Bad Faith in Insurance Cases?The relationship between an insurance company and insured is governed by the insurance contract. However, if the insurance company fails to pay out on a valid claim, the insurance company risks being liable for bad faith. In order for an insured individual to prevail against his or her own insurance company, there are certain legal elements that the insured must prove.
- Top Three Tricks Insurance Companies Use to Fool Car Accident VictimsThe time following a vehicle accident may be quite confusing. Disoriented from pain and unfamiliar legal processes, many accident victims find themselves more susceptible to influence by people or organizations they think they can trust. Unfortunately, insurance companies often take advantage of this condition in order to avoid paying victims everything to which they are entitled.
- 3 Excuses Insurance Companies Use to Deny a Car Accident ClaimInsurance companies often deny personal injury claims with excuses that include denying fault, denying the extent of the injury, and denying causation.
- 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.
- 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.
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 - Wikipedia
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.