I was asked this question by a public insurance adjuster after a "top secret" settlement conference with a major insurer in Houston last night. It is an excellent question, and I will give some general guidance.
First, "bad faith" is a wrong term. Bad faith cases are truly a breach of the obligation of good faith. So, what is an insurer’s obligation of good faith in a first party property insurance claim?
Most insurers would agree this describes their good faith obligations:
"Provide a sufficient number of properly trained and motivated adjusters with sufficient authority to promptly, honestly, and fully investigate facts at its own expense to find, and evaluate, all coverages, damages, and benefits of loss so that the amounts of all covered benefits are paid as soon as possible."
Don’t hold your breath for this to happen in the field, but a number of claims managers agree. Why not–unless you are an insurer that wants to advertise that you consider profits a higher obligation than your legal duties to your customers?
I think this is enough to answer the question. What do you think?