Last Updated: April 2, 2026

Insurance bad faith occurs when an insurance company refuses to settle a claim within the defendant’s policy limits without reasonable justification. This can result in liability for damages beyond the policy limit. Bad faith claims require proving the insurer’s refusal was unreasonable or made in bad faith.

Insurance Bad Faith After a Car Accident in Illinois: Know Your Rights

You pay your insurance premiums every month expecting that your coverage will be there when you need it. But when you file a claim after a car accident, you may discover that the insurance company is more interested in protecting its bottom line than honoring its obligations to you. When an insurer unreasonably denies, delays, or undervalues a legitimate claim, it may be acting in bad faith — and Illinois law provides remedies for policyholders who are treated unfairly.

What Constitutes Insurance Bad Faith

Insurance bad faith occurs when an insurance company fails to deal fairly and honestly with a policyholder or claimant. Under Section 155 of the Illinois Insurance Code (215 ILCS 5/155), policyholders can seek additional damages when an insurer’s delay or denial of a claim is vexatious and unreasonable. Bad faith is not simply a disagreement about the value of a claim — it involves conduct that goes beyond ordinary claims disputes.

Common examples of insurance bad faith in car accident cases include denying a valid claim without conducting a reasonable investigation, failing to respond to communications or provide claim updates within reasonable timeframes, offering a settlement amount that is unreasonably low given the documented damages, misrepresenting policy provisions to avoid coverage, and failing to promptly pay undisputed portions of a claim while disputed portions are being resolved.

First-Party vs. Third-Party Bad Faith

First-party bad faith occurs between the insurer and its own policyholder. This is relevant when you file a UM/UIM claim with your own insurance company or when your insurer fails to defend or indemnify you properly. Third-party bad faith involves the at-fault driver’s insurance company acting unreasonably in handling your personal injury claim. Both types of bad faith are actionable in Illinois.

Remedies for Insurance Bad Faith in Illinois

Section 155 of the Illinois Insurance Code provides meaningful penalties for insurers that engage in bad faith. A court can award the policyholder the amount of the claim, reasonable attorney fees and costs incurred in the bad faith action, and an additional penalty of up to 60 percent of the amount recoverable under the policy or $60,000, whichever is greater. These extra-contractual damages go beyond the original claim amount and serve as a deterrent against unfair insurance practices.

In addition to statutory remedies, Illinois recognizes common law bad faith claims in certain circumstances. These can include claims for emotional distress and other consequential damages caused by the insurer’s unreasonable conduct.

Protecting Yourself Against Bad Faith

The best way to protect yourself against insurance bad faith is to document everything. Keep copies of all correspondence with the insurance company, including emails, letters, and notes from phone conversations documenting who you spoke with, when, and what was discussed. Submit all requested documentation promptly and keep proof of submission. Follow up in writing after phone conversations to create a paper trail.

If you believe your insurance company is acting in bad faith after a car accident, do not accept an unreasonably low settlement offer out of frustration or financial pressure. Consulting with an attorney who understands Illinois insurance bad faith law can help you understand your rights and pursue the additional remedies available under Section 155.

Contact Us About Insurance Bad Faith

If an insurance company is unreasonably denying, delaying, or undervaluing your car accident claim in Central Illinois, contact Parker & Parker Attorneys in Peoria. We hold insurance companies accountable for bad faith conduct and fight to ensure our clients receive the full compensation and policy benefits they are owed.

Dealing with injuries after a car crash can feel overwhelming. Our our Peoria personal injury team can guide you through every step of the legal process.

Related Articles

• Peoria Personal Injury Attorney
• What To Do After a Car Accident in Illinois
• Statute of Limitations for Personal Injury in Illinois
• How Long Does a Settlement Take?
• Burn Injury Claims in Illinois: Types, Treatment, and Compensation
• Loss of Earning Capacity in Illinois Personal Injury Cases
• How Long Does a Personal Injury Settlement Take in Illinois?
• How Comparative Fault Works in Illinois Personal Injury Cases
• What to Expect at Your Free Consultation with Parker & Parker
• Your Personal Injury Case: What Happens After You Hire a Lawyer
• How to Be Your Own Advocate at Medical Appointments After an Accident
• Why You Shouldn’t Rush to Settle Your Illinois Injury Claim
• We Sent a Demand to the Insurance Company — Here’s What Happens Next
• We’re Filing a Lawsuit — What That Actually Means for Your Case
• Your Case Settled — Here’s What Happens With the Money
• How Long to Get a Settlement Check After Signing a Release in Illinois
• How Long to Get a Settlement Check After Signing a Release in Illinois
• What Maximum Medical Improvement (MMI) Means for Your Illinois Injury Settlement
• How Medical Liens Reduce Your Net Settlement in Illinois
• Your Hospital Knows You Have Insurance. Here’s Why They Might Not Use It.