What is the difference between an insurer's liability for bad faith and breach of contract in insurance litigation cases?

The difference between an insurer’s liability for bad faith and breach of contract in insurance litigation cases in New York is based on the types of claims being asserted. Bad faith claims involve the insurer’s alleged improper handling of a claim, while breach of contract claims involve the insurer’s alleged failure to abide by the terms of the insurance policy. In bad faith claims, the insured is seeking damages for the insurer’s failure to investigate, process, or deny a claim as required by law or the policy. The insured must prove that the insurer acted in an unreasonable or unfair manner in dealing with the claim. The damages sought in these cases are typically to compensate for the emotional distress and inconvenience caused by the insurer’s bad faith handling of the claim. In breach of contract claims, the insured is seeking compensation for the insurer’s failure to pay a valid claim and abide by the terms of the policy. The insured must prove that the insurer failed to properly investigate, process, or pay the claim as agreed upon under the policy. The damages sought in these cases are typically to compensate for the actual losses suffered due to the breach of contract. In both bad faith and breach of contract claims, the insured must prove that the insurer’s failure to abide by the terms of the policy has caused the insured some type of harm or loss. The difference between these two claims lies in the type of damages sought by the insured. Bad faith claims seek damages related to emotional distress, while breach of contract claims seek damages related to actual losses.

What is the difference between an insurer's liability for bad faith and breach of contract in insurance litigation cases?

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