Insurance Bad Faith

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.
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    Anyone who has declared someone else to be an idiot, a bad apple, is annoyed when it turns out in the end that he isn’t.
    Friedrich Nietzsche (1844–1900)

    My faith is the grand drama of my life. I’m a believer, so I sing words of God to those who have no faith. I give bird songs to those who dwell in cities and have never heard them, make rhythms for those who know only military marches or jazz, and paint colours for those who see none.
    Olivier Messiaen (1908–1992)