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Bad Faith Breaches And Their Penalties Look Different From State To State

Insurance companies have a duty to their policyholders to attempt to settle litigation that might exceed policy limits in good faith. This duty means that insurance companies must act honestly, intelligently, and objectively in deciding whether to accept a settlement offer that stays within the policy limits. Failure to do so may result in the insurance company being liable for the entirety of the judgment against the policyholder, even if the verdict exceeds the policy limits.