Under the law, your insurance company is required to conduct business in a professional and ethical manner. This is known as good faith and fair dealing. For example, if you file a claim against an insurance company, you should expect them to properly investigate the claim and compensate you if deemed appropriate. This is just good business. However, in some cases insurance companies or representatives may intentionally and unfairly deny claims they are otherwise obligated to pay. Or they may fail to properly defend you in a lawsuit, or indemnify you in the case of a judgment. When this happens, it is known as insurance bad faith, and your insurance company can be held legally liable for their acts or omissions. Insurance companies who have been successfully sued for bad faith may be forced to pay compensatory damages, attorneys fees, and in some cases, even punitive damages. If you believe your insurance company has acted in bad faith, consult an experienced attorney in your area to find out your legal options.