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Bad faith insurance is any matter regarding an insurance claim by an Insured that is wrongfully denied by the Insurer. An insurance policy is considered a contract between you (the Insured) and your insurance carrier (the Insurer). This contract requires that your Insurer acts in "good faith" toward you. When an Insurer unreasonably withholds the benefits of the policy from its Insured, it is considered to be in "bad faith."
Insurance attorneys know that Insurers most frequently attempt to deny claims for any reason they can. Furthermore, when an Insurer acknowledges that a claim or lawsuit is covered by the insurance policy, it most often attempts to underpay a claim.   To determine whether an Insurer is acting in good faith, the Court must determine whether or not the Insurer's conduct is "reasonable." In most states, an Insurer may not put its own interest above that of an Insured.
To prove bad faith, the Insured need only to show that the Insurer failed to honor the contract and had no cause not to pay what was due.

The Insurer has a duty to deal fairly with Insureds. Every insurance contract contains an unwritten covenant or promise of good faith imposed by law upon an Insurer to always act fairly towards its Insureds in handling their claims. Insurers must always meet the reasonable expectations of the policyholder as well as give as much if not more consideration to the financial interests of its Insureds than it does to its own financial interests.
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