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:

    ... business training in early life should not be regarded solely as insurance against destitution in the case of an emergency. For from business experience women can gain, too, knowledge of the world and of human beings, which should be of immeasurable value to their marriage careers. Self-discipline, co-operation, adaptability, efficiency, economic management,—if she learns these in her business life she is liable for many less heartbreaks and disappointments in her married life.
    Hortense Odlum (1892–?)

    In a bad marriage, friends are the invisible glue. If we have enough friends, we may go on for years, intending to leave, talking about leaving—instead of actually getting up and leaving.
    Erica Jong (b. 1942)

    We must be free or die, who speak the tongue
    That Shakespeare spake; the faith and morals hold
    Which Milton held.
    William Wordsworth (1770–1850)