Most states have a governmental agency specifically devoted to regulating the business of insurance. These agencies also investigate complaints against insurance companies or insurance agents. State and federal laws limit and interpret insurance agreements, as do decisions of each state's courts. There are some insurance concepts that all states have in common. Bad faith is an allegation that an insurance company has intentionally failed to abide by the agreement with its insured.
Bad faith is more than a disagreement about what the insurance agreement requires.
For instance, an insurance company may be found to have acted in bad faith if it makes up a reason to avoid paying an eligible claim. Commercial Insurance Commercial insurance allows businesses to protect against liability or other loss that might arise in business. There are many types of commercial insurance, including workers compensation, business interruption, and cargo insurance. If the directors or officers, while acting in their official capacity, cause financial damage to someone else, the insurance company agrees to pay some of the amount the directors or officers owe to the injured party. For example, an investor may tell his stockbroker to buy certain stock within a certain time.