Insurance Coverage:

Bad Faith

Insurance policies carry an implied obligation of good faith and fair dealing. In other words, when an insurance company is presented with a claim, it cannot simply search for a reason not to pay. The company is obligated to:

  • Make a thorough investigation of the claim
  • Consider all circumstances that could support the claim
  • Give as much thought to the financial interest of the insured as it does to its own financial interest

If the insurance company refuses a claim that should be approved, pays less than it’s worth or denies a claim without proper investigation, a bad faith claim against the company may arise. If the company is proved to have acted in bad faith, the insured is entitled to damages.