Insurance bad faith refers to a claim that an insured person has against an insurance company for bad acts.   Bad faith in an insurance claim implies that an insurer has failed to pay a claim for no good reason. Other bad faith insurance claims result because the insurers have taken a position that goes against the insurance coverage policy that is frequently their own.  In issues of bad faith insurance,  laws have been created to uphold a contract that has been breached.

Responsibility, Duty, Liability

  • Your insurance company has a duty to treat you fairly, and to protect you from third-party claims, because you bought the liability insurance, whether on your home or on your automobile.
  • The insurance company has a duty to protect your interest when settling your claim.
  • The insurance company must negotiate the claim rather than just protecting the company’s own interest, or they can be liable to you for not protecting your interests.

If you bought a policy that says it is a 25/50 policy, and you injured someone and the damages exceed $25,000.00, the insurance company does not have to pay more than the $25,000.00 in coverage.

If the other party is willing to settle for the $25,000.00 and liability is reasonably clear, and the damages equal or exceed $25,000.00, the insurance company has to pay the $25,000.00.

Insurance Bad Faith Law Suit:

  • If,  as in the referenced instance, the insurance company does not pay the $25,000.00, then you might be able to sue your insurance company for what is called First-Party Bad Faith in an insurance bad faith lawsuit.
  •  Your insurance company must treat you fairly, and must not expose you to a judgment far in excess of the amount of the coverage when the insurance company could have settled the case within the coverage limits.
  • Under these circumstances, you may be able to sue with an insurance bad faith lawsuit for not only the amount you are personally responsible for to the third-party, but you could also sue for your emotional distress and general damages, and for punitive damages to punish the insurance company for not treating you fairly.

For further information see the related sections on our web site

We are Guenard and Bozarth and we are an agressive personal injury litigation firm.  We can be reached at 888-809-1075 or via e-mail at