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

In Texas, insurance litigation cases involve claims of fraud or bad faith by an insurance company. Fraud implies that the insurance company intentionally deceived the claimant, whereas bad faith describes situations in which an insurance company fails to fulfill its obligations to the claimant, such as by failing to adequately investigate a claim or refusing to pay a valid claim. When it comes to fraud, the key element is intent. The claimant must prove that the insurance company not only was negligent, but that it intended to defraud the claimant by either misrepresenting material facts or deliberately withholding relevant information. In contrast, bad faith does not necessarily require intent because it generally applies to situations where the insurance company did not act in good faith when it came to fulfilling its obligations. For example, an insurance company may be guilty of bad faith if it denied or delayed a valid claim without adequately investigating it first, or if it did not pay a valid claim in a timely manner. Overall, while both fraud and bad faith can lead to costly litigation for an insurance company, the key distinction between the two is intent. Fraud implies that the insurance company intentionally deceived the claimant, while bad faith involves an insurance company failing to fulfill its obligations to the claimant.

Related FAQs

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

Related FAQs

Related Blog Posts