# Bad faith

> What insurance bad faith means, examples of unfair claim handling, how state laws treat it and where to turn if you think an insurer acted in bad faith.

Canonical page: https://statecover-guide.com/glossary/bad-faith/  
Last reviewed: October 28, 2026 by the StateCover Guide editorial team  
General information, not legal or insurance advice.

## Quick answer

Bad faith describes an insurance company handling a claim unfairly or dishonestly, for example refusing to pay or settle a valid claim without a reasonable basis. State laws require insurers to handle claims fairly, and some states also let people sue an insurer over bad-faith conduct.

## How it works

The NAIC's model law on unfair claims settlement practices, which states can adopt in their own form, lists conduct that counts as unfair, including:

- not attempting in good faith to reach a prompt, fair and equitable settlement once liability has become reasonably clear,
- refusing to pay a claim without a reasonable investigation,
- forcing policyholders to sue to collect what the policy owes.

Under that model, the state insurance commissioner enforces the rules, and it does not by itself give consumers a right to sue. Some states add a separate civil remedy. Florida, for example, lets a damaged person sue an insurer that did not try in good faith to settle a claim when it could and should have, after first giving written notice and a chance to fix the problem. Florida's law also says that negligence alone is not enough to show bad faith.

A low offer or a slow claim is not automatically bad faith. If you think a claim was mishandled, you can complain to your state insurance department or speak with a lawyer licensed in your state.

## Related terms

- [Claim](https://statecover-guide.com/glossary/claim/)
- [Adjuster](https://statecover-guide.com/glossary/adjuster/)
- [State insurance department](https://statecover-guide.com/glossary/state-insurance-department/)
- Guide: [Car insurance claim disputes](https://statecover-guide.com/claims/claim-disputes/)

## Sources

- [NAIC, Unfair Claims Settlement Practices Act (Model 900)](https://content.naic.org/sites/default/files/model-law-900.pdf) — list of unfair claims practices, commissioner enforcement, no private right of action
- [Florida Statutes, Section 624.155](https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0624/Sections/0624.155.html) — civil remedy, notice requirement, negligence alone not bad faith