If an insurance company violates that covenant, the insured person (or ''policyholder'') may sue the company on a tort claim in addition to a standard breach of contract claim. The contract-tort distinction is significant because as a matter of public policy, punitive or exemplary damages are unavailable for contract claims, but are available for tort claims. In addition, consequential damages for breach of contract are traditionally subject to certain constraints not applicable to tort actions (see Hadley v. Baxendale). The result is that a plaintiff in an insurance bad faith case may be able to recover an amount larger than the original face value of the policy, if the insurance company's conduct was particularly egregious.

Multi-choice problem: Is it true that can i sue my insurance company for bad faith?

Options:
+ no.
+ yes.
The answer is:
yes