A bad faith claim is a lawsuit filed against an insurance company when they unreasonably refuse to pay a valid personal injury claim or fail to properly investigate and handle the claim in good faith. Insurance companies have a legal duty to treat their policyholders fairly, which means they must thoroughly investigate claims, communicate clearly, and pay out legitimate claims promptly and fairly. When an insurance company denies a claim without a reasonable basis, delays payment unnecessarily, or tries to lowball settlements on clearly valid claims, they may be acting in bad faith.
Bad faith claims allow injured people to sue their own insurance company (or the at-fault party's insurance company in some cases) for additional damages beyond what the original personal injury claim was worth. If you win a bad faith lawsuit, you can potentially recover not only the money the insurance company should have paid originally, but also punitive damages designed to punish the insurer for their misconduct. These cases are powerful tools to hold insurance companies accountable when they try to avoid paying legitimate claims, though they require proving that the insurance company's actions were unreasonable rather than just a honest disagreement about the value of a claim.
