Duty of Good Faith? What’s that all about?
The duty of good faith and fair dealing applies to all insurance companies and in the United States. They have duties codified in every state statutes. All states are very similar since these duty arises the same place, the second restatement of contracts.
There are duties that insurance companies must fulfill when dealing with the public. There are duties to their insured (first party) and duties to the Claimant (third party).
In a first party claim, the insurance company must be: Fair, Cannot lie or misrepresent, full and ongoing disclosure of liability, negotiations, coverage, settlement offers, etc. Timely assistance filling out forms, and getting the correct paper work to the insurance company. The insured can sue for a breach duty by the insurance company and could be awarded 3 times damages plus attorneys fees.
In a third party claim, the insurance company must: Not lie or misrepresent, and Must disclose the statute of limitations (that is if you do not have legal counsel). That is about it. There are no bad faith lawsuits allowed for third parties, unless you are in Montana.
Learn more about Accident Coverages and duties
