Insurance companies owe a duty of good faith to their insureds. When an insurance claim is made, insurers must process, investigate, assess, and make decisions on coverage fairly, thoroughly, and promptly, even when the claim is ultimately denied.
Bad faith is, simply put, a breach of the duty of good faith. It is more than just being delayed or wrong; it is a serious and stigmatizing legal allegation that suggests that an insurer intentionally mishandled a claim, acted with improper motive, or made reckless and unreasonable decisions.
When coverage is denied in Manitoba, dissatisfied insureds have the right to commence a legal action against the insurer and claim for coverage or damages for breach of contract. Increasingly, these actions also contain allegations of bad faith.