Insurance Bad Faith
Insurance bad faith is a tort claim that an insured person may have against an insurance company for its bad acts. Insurers are subject to an implied duty of good faith and fair dealing in their handling of claims made by their insureds. If an insurance company violates that covenant, the insured person may sue the company on a tort claim in addition to a standard breach of contract claim. The end result is that a plaintiff in an insurance bad faith case may be able to recover an amount larger than the original face value of the policy.
There are two (2) types of bad faith claims:
- First Party Bad Faith Claims: this is a claim brought by the insured against the insurer alleges that the insurer failed to pay or properly investigate the insured’s claim, that the insurer did not deal fairly in settling the insured’s claim, or that the insurer failed to settle with an injured third party.
- Third Party Bad Faith Claims: this claim arises out of claims made against the insured upon obtaining a judgment in excess of the policy limits.
Insurance bad faith cases are complex. In order to preserve a potential bad faith case, it is recommneded that you act quickly if you think the insurance company has not handled your insurance claim fairly.
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