Insurance Bad Faith Claims in Indiana

 When an Indiana insurer fails to pay a claim on a policy, the policy holder has two possible legal remedies: a contract claim and a tort claim. The principle distinction between the two is that, as a matter of public policy, punitive damages are only available in tort claims. Therefore, if an insurer wrongly denies coverage and violates an insurance contract, a breach of contract claim will only allow recovery up to the face value of the policy. https://askcompetentlawyer.com/fraud/ However, an Indiana plaintiff can also sue under an insurance bad faith claim and recover, through both compensatory and punitive damages, an amount larger than the original face value of the policy (depending on the egregiousness of the insurer's conduct).

The concept of the insurance tort claim arises out of the implied duty of good faith and fair dealing that is recognized in all insurance policies in almost every US jurisdiction. Indiana first recognized an insurer's duty to act in good faith in the 1993 Indiana Supreme Court ruling in Erie Insurance Co. V. Hickman by Smith. Since this ruling, Indiana has been in a constant state of defining and redefining the limits of the bad faith tort claim.