Insurance bad faith describes a claim that an insured person may have against an insurance company for its bad acts. Insurance companies owe a duty of good faith and fair dealing to their policy holders. 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 policy holder may have a claim and can sue the insurance company. Bad faith can happen when an insurance company improperly investigates and valuates property they insure when damage occurs, or when they refuse to pay a judgement entered against the policy holder.
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