Accident Claim Lawyers
InsuranceUpdated September 2026

Bad faith insurance claims

In plain English: bad faith is when an insurer handles a claim unfairly or dishonestly, for example by denying a valid claim without a proper reason, dragging it out, or refusing to settle within policy limits when it should.

Examples of possible bad faith

  • Denying a claim without investigating it or explaining why.
  • Repeatedly asking for the same documents to delay payment.
  • Misrepresenting what your policy covers.
  • Offering far less than the evidence supports with no reasoned basis.
  • Ignoring deadlines set by law for responding to claims.
  • Refusing a reasonable settlement within the policy limit, exposing its own policyholder to a judgment above the limit.

First-party and third-party bad faith

First-party bad faith involves your own insurer, for example on a collision, PIP or uninsured motorist claim. Third-party bad faith usually involves an insurer failing to protect its own customer when someone else sues them. In the US, many states allow extra damages for bad faith, and some have statutes listing unfair claims practices.

Outside the US

The UK doesn't have a US-style bad-faith lawsuit, but insurers must handle claims fairly and promptly under Financial Conduct Authority rules, and the Insurance Act 2015 allows damages for unreasonably late payment. You can complain to the insurer and then to the Financial Ombudsman Service. Canadian courts can award damages, occasionally including punitive damages, for an insurer's breach of its duty of good faith.

What to do if you suspect bad faith

  • Put your questions in writing and ask for the specific policy wording relied on.
  • Keep a log of every call: date, name and what was said.
  • Make a formal complaint using the insurer's process.
  • Contact your state insurance department, provincial regulator or the Financial Ombudsman Service.
  • Talk to a lawyer. Bad-faith rules and deadlines vary a lot between places.
Low isn't always bad faith

An offer you disagree with isn't automatically bad faith. The question is whether the insurer acted unreasonably or without a proper basis.

Related: good faith · reservation of rights · insurance regulators and complaints.

Related terms

Declarations PageThe declarations page, often called the "dec page", is the summary sheet at the front of an insurance policy.DeductibleA deductible is the amount you pay toward a claim on your own insurance before the insurer pays the rest.Diminished ValueDiminished value is the drop in your car's resale price because it now has an accident history, even after it has been properly repaired.ExclusionAn exclusion is a clause in an insurance policy that removes certain people, vehicles, activities or losses from cover, even though they might otherwise seem to fall within it.

General information, not legal or medical advice. Rules differ between US states, the UK and Canadian provinces, so check the law where your accident happened. How we write and check · Legal disclaimer