What type of recovery will a bad faith lawsuit provide?
If the claim is not settled out of court with the insurance company, a lawsuit can be pursued. If the lawsuit is successful (i.e., the court verdict is that the insurer engaged in bad faith practices), the insured party is eligible to recover the claim benefits that weren’t paid by the insurance company, in addition to any additional damages or losses that the insured suffered as a direct result of the denied claim. This part of a verdict is meant as “compensatory”—that is, to compensate the injured party. Other “punitive” damages may also be part of a verdict; this is essentially a fine that the insurance company is ordered to pay to the injured party.
