Insurance Bad Faith

When a consumer purchases insurance, the insurance company has a legal duty to that consumer to handle claims promptly, reasonably, fairly, and in good faith. It is assumed, for example, that health insurers will pay for covered medical care and car insurers are expected to handle covered expenses in the event of a car accident. Because individuals depend on their insurers to do what is promised, there are laws in place that punish insurers who do not. These laws are referred to as insurance bad faith laws, and they impose civil penalties on insurance companies that unfairly deny claims or otherwise fail to uphold their agreements. Consult this section to learn more about the types of behaviors that constitute insurance bad faith and the recourse available to consumers.