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–?)
“He was high and mighty. But the kindest creature to his slaves—and the unfortunate results of his bad ways were not sold, had not to jump over ice blocks. They were kept in full view and provided for handsomely in his will. His wife and daughters in the might of their purity and innocence are supposed never to dream of what is as plain before their eyes as the sunlight, and they play their parts of unsuspecting angels to the letter.”
—Anonymous Antebellum Confederate Women. Previously quoted by Mary Boykin Chesnut in Mary Chesnut’s Civil War, edited by C. Vann Woodward (1981)
“He was of the faith chiefly in the sense that the church he currently did not attend was Catholic.”
—Kingsley Amis (b. 1922)