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.


Bad Faith Insurance Law Articles

  • 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.

  • Pursuing a Bad Faith Insurance Claim

    When an insurance company has denied coverage, is unwilling to provide a settlement and similar matters, an insurance company may be involved in bad faith claims. This means the carrier is attempting to get out of providing entitled monetary compensation for a policy that has coverage of the damage caused by the incident.

  • Understanding Bad Faith Claims Against Insurance Companies

    Insurance 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. Insurance and Reinsurance Law Guides

Bad Faith Insurance Law is part of the Insurance and Reinsurance Law practice which also deals with: Insurance Defense, Insurance Fraud and Medical Insurance.
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