We purchase insurance to protect us from all kinds of perils including car crashes, natural disasters - including tornadoes and earthquakes, along with many others types of unexpected events.
“When an insurance company unreasonably withholds or denies their obligations and fails to fulfill their promises, you may have a ‘Bad Faith' case.”
Sometimes the insurance companies decide to withhold payment-- even when we believe we had the proper coverage in place. Insurance bad faith is a legal term that describes a legal claim that an insured person may have against an insurance company for its bad acts. Under the law of most jurisdictions in the United States, insurance companies owe a duty of good faith and fair dealing to the persons they insure. This duty is often referred to as the "implied covenant of good faith and fair dealing" which automatically exists by operation of law in every insurance contract. If an insurance company violates that covenant, the insured person (or "policyholder") may sue the company on a tort claim in addition to a standard breach of contract claim. The contract-tort distinction is significant because as a matter of public policy, punitive or exemplary damages are unavailable for contract claims, but are available for tort claims. In addition, consequential damages for breach of contract are traditionally subject to certain constraints not applicable to tort actions. The result is that a plaintiff in an insurance bad faith case may be able to recover an amount larger than the original face value of the policy, if the insurance company's conduct was particularly egregious.