Unjust Claim Denial: An insurer may be liable for bad faith if it denies a claim without a reasonable basis for doing so. This means denying coverage or refusing to pay a claim when the facts and the policy terms would normally require payment.
Unreasonable Delay in Claim Processing: Insurers are expected to handle claims promptly and efficiently. If an insurer drags its feet without good reason, causing unnecessary delay in acknowledging, processing, or settling a claim, it could be considered bad faith.
Failure to Conduct a Proper Investigation: An insurer must conduct a thorough and fair investigation of each claim. Liability for bad faith may arise if the insurer either fails to investigate adequately or performs an investigation in a biased manner to justify denying a claim or reducing a payout.