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–?)
“One has to be a lowbrow, a bit of a murderer, to be a politician, ready and willing to see people sacrificed, slaughtered, for the sake of an idea, whether a good one or a bad one.”
—Henry Miller (1891–1980)
“Of the best rulers The people only know that they exist; The next best they love and praise The next they fear; And the next they revile. When they do not command the people’s faith, Some will lose faith in them, And then they resort to oaths! But of the best when their task is accomplished, their work done, The people all remark, “We have done it ourselves.””
—Lao-Tzu (6th century B.C.)