People purchase insurance to protect themselves in the unfortunate event of personal injury, property damage, or acts of negligence. Insurance companies owe a duty to act in good faith and in the interest of their insured.
Unfortunately, when an insured is in dire financial straits or suffering emotional trauma due to a loss, the insurance company may engage in abusive or delaying tactics to avoid or delay paying benefits under the policy. The insurance company may misinterpret a policy to lead an insured to believe that the claim is not covered. It may insist that the insured contribute to a settlement in order to settle a claim. It may make arbitrary or unreasonable demands for documents as a condition to paying a claim.
Such conduct may give rise to a claim for insurance bad faith. Insurers who are found to have acted in bad faith can be liable for damages in excess of the limits of the insurance policy, penalties, emotional distress, punitive damages and attorney’s fees.