"What is 'Bad Faith'?
Generally speaking, bad faith is the unreasonable failure of an insurance company to honor the terms of an insurance policy it sells to a consumer. The New Jersey Supreme Court summed the idea up nicely in Bowler v. Fidelity & Casualty Co. of New York, 53 N.J. 313, 250 A.2d 580:
“Insurance policies are contracts of utmost good faith and must be administered and performed as such by the insurer. Good faith ‘demands that the insurer deal with laymen as laymen and not as experts in the subtleties of law and underwriting.’ [Citations omitted.] In all insurance contracts, particularly where the language expressing the extent of the coverage may be deceptive to the ordinary layman, there is an implied covenant of good faith and fair dealing that the insurer will not do anything to injure the right of its policyholder to receive the benefits of his contract.”"
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