What is the difference between fraud and bad faith in insurance litigation cases?

Fraud and bad faith are two distinct concepts in Florida insurance litigation cases. Fraud refers to a deliberate act of material misrepresentation for the purpose of illegally benefitting from an insurance policy. Bad faith, on the other hand, refers to an insurance company’s intentional or negligent refusal to pay a claim or provide a fair settlement. In the case of fraud, an insured party may be denied coverage, or may be only partially compensated for damages. Fraud is punishable under the criminal laws of Florida, and can result in significant penalties for any involved parties. Bad faith is a tort committed by the insurance company. It may involve refusing to pay a claim when the company should, delaying payment without justification, delaying payment despite evidence of the insured’s proper submission of the claim, or failing to provide a reasonable defense in an insurance suit. Unlike with fraud, the insured is typically not involved in the bad faith action, and any damages that may be owed to the insured as a result of the bad faith action must be recovered through a civil suit. Punitive damages may also be available, depending on the facts of the case.

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What is the difference between fraud and bad faith in insurance litigation cases?

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