What is known as Insurance Bad Faith (or insurance fraud) is actually a tort claim that an individual with insurance may have against an insurance company.
Who is involved in an Insurance Bad Faith claim is an insurance company and the insured party.
Why insurance fraud occurs is because insurance companies owe a duty of good faith and fair dealing to the persons they insure. This duty is often referred to as covenant.
When insurance bad faith has occurred it means that an Insurance Company has violated the legal covenant.
How a legal covenant can be violated is often quite complicated and can occur in many ways. In some instances improver investigation by an insurance company of damaged property can qualify as bad faith. Other violations can include improper valuations of damages, delay of payment for damages, denial of all valid damage claims ect.
