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:
“For there can be no whiter whiteness than this one:
An insurance mans shirt on its morning run.”
—Gwendolyn Brooks (b. 1917)
“We all have bad days, of course, a secret that only makes us feel more guilty. But once my friends and I started telling the truth about how far we deviated from perfection, we couldnt stop. . . . One mother admitted leaving the grocery store without her kidsI just forgot them. The manager found them in the frozen foods aisle, eating Eskimo Pies.”
—Mary Kay Blakely (20th century)
“I have no faith in human perfectability. I think that human exertion will have no appreciable effect upon humanity. Man is now only more activenot more happynor more wise, than he was 6000 years ago.”
—Edgar Allan Poe (18091845)