What is the law regarding an insurer’s bad faith and its obligations and duties to a policy holder?

UPDATED: Oct 1, 2022

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What is the law regarding an insurer’s bad faith and its obligations and duties to a policy holder?

About 5 months ago, I made a claim with my homeowner’s insurance company because I found that my residence was burglarized and vandalized. The copper piping was torn out of nearly the entire house. The police were called. As of now no adjuster or claims representative has come the property to view the damage. My policy was then canceled following an inspection of my home’s exterior, yet the pictures of the house turned out to be of the wrong residence entirely. For nearly 3 months my documented claims rep. was not communicating with me whatsoever, would not answer phone calls, or messages. He would not respond to my emails. At a certain point, an investigator contacted me through phone and email demanded a list of various information and/or documents, etc. Following that, the claims rep responded by email and said, among other things, that I was to communicate specifically and directly with the investigator and he was to be not involved. I simply did not except his offer and told him that he and I would be communicating regarding the claim as he is the documented and verified representative on this claim.

Asked on November 20, 2018 under Insurance Law, Pennsylvania


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

An insurance policy is a contract: the insurer must pay claims when, under the terms of the contract, they should be paid. Also, all parties to a contract have a duty of "good faith and fair dealing" imposed by law--an obligation to deal with the other side fairly and not take steps or actions to deprive the other other side of the benefit of the contract. If the insurer is refusing to honor a claim that they should and is not dealing with you in good faith, you can sue them for breach of contract and breach of the covenant of good faith and fair dealing. If you can show in court they violated the terms of the policy or have not acted in good faith you can get a court order requiring that the insurer pays.

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