Litigation
Bad faith lawsuits may result in large awards of punitive damages. A famous example is State Farm Mutual Auto. Ins. Co. v. Campbell, in which the U.S. Supreme Court overturned a jury verdict of $145 million in punitive damages against State Farm Insurance. Bad faith cases may also be slow, at least in the third party context, because they are necessarily dependent upon the outcome of any underlying litigation. For example, the 2003 Campbell decision involved State Farm's handling of litigation resulting from a fatal car accident in 1981, 22 years earlier.
Toxic mold is a common cause of bad faith lawsuits, with about half of the 10,000 toxic mold cases in 2001 being filed against insurance companies on bad faith grounds. Before 2000 the claims were uncommon, with relatively low payouts. One notable lawsuit occurred when a Texas jury awarded $32 million (later reduced to $4 million). In 2002 a suit was settled for $7.2 million.
Read more about this topic: Insurance Bad Faith