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What Is Bad Faith?

When an Insurance Company Denies Your claim without a Reasonable Basis

In Wisconsin, bad faith is the refusal to timely pay a claim or without a reasonable basis and with knowledge of or disrespect even if insurer has a reasonable basis for denial, failing to properly investigate the claim in a

To prove a first-party bad faith claim, the insured has been required to establish two elements. The first element is that there is no reasonable basis for the insurer to deny the insured’s claim for benefits under the policy. This “first prong is objective.”  In other words, no reasonable insurance company would have taken the position that the insurance company has taken.

The second element is that the insurer knew of or recklessly disregarded the lack of a reasonable basis to deny the claim. This second prong is subjective.  In other words, what the insurance company actually knew or should have known.

It is important to remember that a bad faith claim is a tort claim.  The tort cause of action for bad faith arises out of a contractual arrangement but is not a contract action. The tort of bad faith is a separate intentional wrong, which results from a breach of a duty imposed as a consequence of the contractual relationship.

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