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–?)
“Is a man too strong and fierce for society, and by temper and position a bad citizen,—a morose ruffian, with a dash of the pirate in him;Mnature sends him a troop of pretty sons and daughters, who are getting along in the dame’s classes at the village school, and love and fear for them smooths his grim scowl to courtesy. Thus she contrives to intenerate the granite and the feldspar, takes the boar out and puts the lamb in, and keeps her balance true.”
—Ralph Waldo Emerson (1803–1882)
“To exist is equivalent to an act of faith, a protest against the truth, an interminable prayer.... As soon as they consent to live, the unbeliever and the man of faith are fundamentally the same, since both have made the only decision that defines a being.”
—E.M. Cioran (b. 1911)