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Are Breach of Contract and Bad Faith the Same?

While the phrases breach of contract and insurance bad faith may sound like they have the same meaning, there are distinct details that set them apart. Read on to learn more about the differences between a breach of contract and insurance bad faith.

Breach of Contract

If someone fails to execute an element of a contract, either written or oral, without a viable legal reason for doing so, a breach of contract has occurred. This can include any of the following:

  • Failing to complete a job,
  • Failing to pay in full or by the deadline,
  • Not delivering all the goods or services promised,
  • Not producing a bond when necessary,
  • Not honoring a promise made in the contract,
  • Being late with no excuse, or
  • Any action that displays the party won’t finish the work (anticipatory breach).

Insurance Bad Faith

In California, there are two kinds of insurance bad faith cases – first-party bad faith (by an insured against his/her/its insurance company) and third-party bad faith (by a third party against an insured defendant’s insurance company).

Insurance bad faith occurs when a provider is intentionally dishonest by:

  • Not upholding their legal or contractual obligations,
  • Misleading another,
  • Beginning an agreement without intending or having the means to uphold it, or
  • Infringing on fundamental standards of truth when dealing with others.

The “implied covenant of good faith and fair dealing” is required of insurance providers at all times and is breached when an act of bad faith occurs.

We Can Help

If you have more questions about the differences between a breach of contract and insurance bad faith, reach out to our skilled team right away. We have helped many others with their contract and bad faith issues, and we want to do the same for you. Don’t delay—contact us right away to learn more about what we can do to help with your case.

If you have been negatively impacted by a breach of contract or insurance bad faith, call our Los Angeles attorneys at (866) 634-4525 or contact us online. We will fight to recover your full and fair compensation.

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