Skip to Content

bad faith

Bad faith is the term describing blatantly unfair conduct that exceeds mere negligence by an insurance company.

On This Page

Additional Information

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.

Related Terms

Extracontractual damages are damages that are in addition to or outside of a contract of insurance.