New York

Guide for Causes of Action for Bad Faith Claims

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Last Updated
July 20, 2021

Bad Faith Claim by Statute

While certain practices are regulated by statute, (Unfair Claims Settlement Practices are regulated by N.Y. Ins. Law § 2601 & Unfair or deceptive consumer practices are regulated by General Business Law § 349.), there is no statute allowing a bad faith claim.

Bad Faith Claim by Common Law

Common law claims for bad faith.

When a third party brings an action against an insurer for failure to settle a case, damages in excess of policy limits will be allowed if the insurer’s actions show a “‘conscious or knowing indifference to the probability’ of an excess verdict.” Pinto v. Allstate Ins. Co., 221 F.3d 394, 400 (2d Cir. 2000); Home Ins. Co. v. United Servs. Auto. Ass'n, 262 A.D.2d 452, 692 N.Y.S.2d 121 (2d Dept. 1999); Pavia v. State Farm Mut. Auto. Ins. Co., 626 N.E.2d 24 (1993). A third-party cannot bring a bad faith claim against an insurer, but a third-party can secure an assignment from the insured to bring a third-party claim against the insurer.  Id.

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Chartwell Law represents the interests of insurers and employers, as such, we continue to continue to monitor the legal landscape. If you have any questions about issues associated with right of action for bad faith claims, our attorneys are available to help. Please contact your Chartwell Law attorney.