Insurance Disputes and Bad Faith
Insurance bad faith refers to a contract or tort claim that an insured person has against an insurance company for its bad acts. In the United States, insurance companies owe a duty of good faith and fair dealing with the individuals with whom they insure. This duty is known as the “implied covenant of good faith and fair dealing” which goes into effect automatically with every insurance contract. When an insurance company violates this agreement, then the policyholder has the right to sue the insurance company on a tort claim. With a tort claim the plaintiff in an insurance bad faith case may be able to recover greater compensation than the face value of their insurance policy, particularly if the insurance company’s conduct was egregious.
Bad faith can occur in a variety of situations; for example, an insurance company can refuse to defend a lawsuit or they can improperly refuse to pay a judgment or a settlement in a covered lawsuit. An insurance company can breach in bad faith its duty to defend, indemnify or settle, in which case the insurance carrier may be found liable for the entire judgment obtained by a plaintiff against the policy holder, even if that amount exceeds the limits of the policy. Other examples of bad faith include a delay in handling claims, an inadequate investigation, making threats against the insured, refusing to make a reasonable settlement offer, or making unreasonable interpretations of an insurance policy.
If you have a dispute with an insurance company or if you believe the insurance carrier has failed to uphold its duties, you may have a bad faith claim. To learn more, contact a California personal injury attorney from The Dunnion Law Firm today!