How to Recognize an Attempted Bad Faith Set Up

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Bad faith insurance claims are successful when a plaintiff can prove that the insurance company wrongfully denied an insurance claim and deprived the insured of the benefits of the contract of insurance without good cause. Bad faith insurance suits can arise in the context of any insurance policy.

In light of the substantial damage awards attendant to bad faith claims, plaintiffs’ attorneys have great incentive to try to maneuver insurance companies into committing acts that may constitute bad faith. They may, and fairly often do, attempt such “set-ups” by creating a situation where the insurer refuses to settle a tort claim within policy limits within a limited period of time. The plaintiff’s purpose, of course, is to recover substantial extra-contractual damages, including attorneys’ fees, where permitted. In short, since a bad faith verdict can be vastly more lucrative than simply collecting on a “within policy limits” claim.