Under the law, and under your contract with your insurance company, the insurer has all kinds of duties they must perform in exchange for you paying insurance premiums. So, if you bring a claim against your insurance company for property damage under your homeowners policy, or perhaps for uninsured motorists claim, or an under insured motorists’ claim, they must fairly evaluate the claim and offer you a reasonable amount of compensation.
They also must process the claim in a reasonably timely manner. Sometimes we face situations where the insurance company knows that the person who bought the insurance policy has suffered catastrophic damages. Instead of immediately evaluating those damages and compensating the insured, the insurance company strings them along. In extreme cases, a plaintiff may be desperate for compensation in order to get necessary surgery caused by an accident, or perhaps in order to repair a roof as a result of a natural disaster.
A classic example of bad faith is where an insurance company strings along its insured along and later offers a paltry amount of money, hoping that their insured is so desperate they will accept it.