Insurance bad faith is a legal term of art unique to the law of the United States 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. The 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, if the insurance company's conduct was particularly egregious.
Read more about Insurance Bad Faith: Historical Background, Bad Faith Defined, Assignment or Direct Action, Litigation
Famous quotes containing the words insurance, bad and/or faith:
“Women hock their jewels and their husbands’ insurance policies to acquire an unaccustomed shade in hair or crêpe de chine. Why then is it that when anyone commits anything novel in the arts he should be always greeted by this same peevish howl of pain and surprise? One is led to suspect that the interest people show in these much talked of commodities, painting, music, and writing, cannot be very deep or very genuine when they so wince under an unexpected impact.”
—John Dos Passos (1896–1970)
“My family’s lives were not on television, not in books, not even comic books. There was a myth of the poor in this country, but it did not include us, no matter how hard I tried to squeeze us in. There was an idea of the good poor—hard-working, ragged but clean, and intrinsically honorable. I understood that we were the bad poor ...”
—Dorothy Allison (b. 1949)
“My life is superficial, takes no root in the deep world; I ask, When shall I die, and be relieved of the responsibility of seeing a Universe which I do not use? I wish to exchange this flash-of-lightning faith for continuous daylight, this fever-glow for a benign climate.”
—Ralph Waldo Emerson (1803–1882)