Any time an insurance company puts their interests ahead of yours, that is what is called bad faith.
When you have a claim, the insurance company really owes all of its duties to you, the policyholder. They have the obligation to go beyond the basics try to figure out what losses might be covered under your policy.
The law automatically adds a covenant of good faith and fair dealing to every insurance policy. If the insurance company breaches that, it's called bad faith, and it makes the stakes a lot higher for them.
If an insurer denies a $15,000 case, for instance, and they get sued, all they stand to lose is $15,000. Not a big deal for them. Most people aren’t going to sue them for that amount, nor are most lawyers going to take such a small case.
But bad faith can make a small case worth pursuing, because that means the case can now be worth much, much more. A $15,000 case can be worth half a million dollars if there’s pattern and practice of the insurance company not dealing fairly and in good faith with their policyholders. That’s where some of the leverage comes in.
I don't try to drag a case out hoping the insurance carrier will make a mistake, or try to find somebody who will say something, so that we can allege bad faith. I try to get cases resolved for my clients promptly. But, I know what bad faith is, and I make sure the insurance company knows that. If I think they in danger of treading in that territory, that adds leverage.