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:

    For there can be no whiter whiteness than this one:
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    It is always consoling to think of suicide: in that way one gets through many a bad night.
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    What a wretched lot of old shrivelled creatures we shall be by-and-by. Never mind—the uglier we get in the eyes of others, the lovelier we shall be to each other; that has always been my firm faith about friendship.
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