Insurance bad faith occurs when insurers violate duties of good faith and fair dealing owed to policyholders through improper claim handling. Unreasonable claim denial despite clear coverage violates fundamental insurance purposes. Delayed payment without justification forces policyholders into financial distress. Inadequate investigation ignoring favorable evidence demonstrates result-oriented handling. Lowball settlement offers far below claim value exploit policyholder desperation. Misrepresenting policy terms or applicable law deceives insureds about rights. Threatening litigation to force inadequate settlements abuses power disparities. Failing to defend covered claims exposes policyholders to personal liability. Improper claim procedures violating regulations evidence systematic bad faith. Economic duress through delayed payments forces acceptance of inadequate offers. Institutional practices prioritizing profits over claims payment demonstrate corporate bad faith. Punitive damages punish egregious conduct and deter industry-wide practices. Emotional distress damages compensate for anxiety, humiliation, and financial stress. Attorney fees shift when bad faith forces unnecessary litigation. Consequential damages include losses from delayed payments like foreclosures. Understanding bad faith empowers policyholders to demand proper treatment while pursuing accountability for insurance abuse.