bad faith
A term describing blatantly unfair conduct that exceeds mere negligence by
an insurance company. For example, a bad faith claim may arise if an auto liability
insurer arbitrarily refuses to settle a claim within policy limits, where an
insured's liability is incontrovertible. Bad faith damages, also known as extracontractual
damages, are often substantial. They frequently exceed the limits of the insurance
policy that is the subject of the claim. See also
Extracontractual damages.
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PLI XV.T