What is an insurer's duty of good faith?

An insurer’s duty of good faith is a legal responsibility to act honestly and fairly in dealing with policyholders. In North Carolina, insurers are required to act in good faith when handling insurance claims. This means they must investigate and process claims in a timely fashion, make reasonable offers of payment for claims, and provide clear explanations for any decisions they make. When an insurer fails to fulfill its duty of good faith, an aggrieved party may bring a suit in court for a breach of the duty. A successful claim can result in a court order requiring the insurer to pay the policyholder’s damages, including attorney’s fees and court costs. In North Carolina, if an insurer is found to have acted in bad faith, they can be liable for not only compensatory damages, such as medical bills, but also punitive damages. Punitive damages are designed to punish the at-fault party for their misconduct and act as a deterrent to future bad faith actions. Insurance companies have a duty to act in good faith and handle claims in a timely and reasonable manner. If an insurer fails to fulfill its duty, they may face legal penalties or a breach of contract claim. It is important to be aware of your rights and responsibilities when dealing with an insurance company to ensure that your claim is handled properly and in a timely manner.

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What is an insurer's duty of good faith?

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