Bad Faith
Definition:
When an insurance company fails to act honestly or fairly in handling a claim.
Explanation:
Bad faith can include unreasonable delays, denying valid claims, or failing to properly investigate a loss. Homeowners may have legal recourse if they can prove bad faith.
Example:
If your insurer refuses to pay for obvious fire damage without explanation, that could be considered acting in bad faith.
Why it matters:
This term affects how claims are handled and what payout a homeowner may receive.