What is insurance bad faith?
The concept of insurance bad faith is often referred to as well by the term extra contractual liability. That is, when you purchase insurance and the insurance company agrees that they will pay up to a certain amount of whatever you decide to purchase for any kind of loss or injury damage that occurs, so they have a good faith obligation to take care of the claim and to protect you as the insured. If the insurance company fails to do that, then they can be responsible for more than the amount of the policy limits that they have contracted for, and so they have what is called extra contractual liability. That term extra contractual liability is also referred to as bad faith, and that is they have not acted in good faith in resolving the claim for the protection of the insured.
