Insurance Bad Faith

Insurance Bad Faith: "Insurance is a contract. In return for premiums, the insurer agrees to indemnify and defend you if a covered event occurs.

What if the insurer does not fulfill its obligations?

When an insurer fails to act in such a way as required in the policy (the 'contract') the insured may have a claim for 'bad faith.' 'Bad faith' is defined as:

1) n. intentional dishonest act by not fulfilling legal or contractual obligations, misleading another, entering into an agreement without the intention or means to fulfill it, or violating basic standards of honesty in dealing with others. Most states recognize what is called 'implied covenant of good faith and fair dealing' which is breached by acts of bad faith, for which a lawsuit may be brought (filed) for the breach (just as one might sue for breach of contract). The question of bad faith may be raised as a defense to a suit on a contract. 2) adj. when there is bad faith then a transaction is called a 'bad faith' contract or 'bad faith' offer."