Extracontractual damages exceed what the policy promised and may include the excess judgment, consequential economic losses, emotional distress, attorney's fees, and punitive damages.
Availability depends on whether the jurisdiction treats bad faith as a tort or confines it to contract remedies.
Alternative Names:
Extra-Contractual Damages, Bad Faith Damages
Why it Matters?
These damages are why bad faith exposure is categorically different from a coverage dispute: a carrier contesting a one hundred thousand dollar claim can face a verdict many multiples larger. That asymmetry is what makes documented reasonable investigation and timely demand responses worth their cost, and it is why the claim file receives such attention in coverage litigation.
Frequently Confused with
Related terms
Frequently asked questions
What damages are available for bad faith?
Do all states permit extracontractual recovery?
