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)
“For when as each thing bad thou hast entomb’d,
And last of all, thy greedy self consum’d,
Then long Eternity shall greet our bliss
With an individual kiss;”
—John Milton (1608–1674)
“More Safe, and much more modest ‘tis, to say
God wou’d not leave Mankind without a way:
And that the Scriptures, though not every where
Free from Corruption, or intire, or clear,
Are uncorrupt, sufficient, clear, intire,
In all things which our needfull Faith require.
If others in the same Glass better see
‘Tis for Themselves they look, but not for me:
For MY Salvation must its Doom receive
Not from what OTHERS, but what I believe.”
—John Dryden (1631–1700)