Nearly any type of civil dispute can be mediated, including bad faith insurance claims. While it may seem counterintuitive to believe that an insurance company accused of acting in bad faith will negotiate in mediation in good faith, mediation of these cases often brings about an amicable solution of this claim, as well as the underlying insurance claim.

In a bad faith insurance claim, the plaintiff argues that the insurer wrongfully denied a claim or did not provide benefits in bad faith. He or she may allege wrongful conduct, unreasonable conduct without proper cause or malicious, oppressive or fraudulent conduct. The worse the insurer’s behavior, the greater liability may potentially exist and the more expansive damages that may be sought.

Parties may consider when they wish to mediate the case. In some jurisdictions, mediation may be required at certain intervals. Otherwise, the party may decide to mediate the case early on or closer to trial. Early mediation has the potential to reduce legal fees if an agreement can be reached. However, an insured who wants to seek punitive damages may not be willing to accept a lower offer at this point. Additionally, an insurance company may want to flesh out whether a claim has support before negotiating a settlement and may prefer to wait until after discovery is conducted to mediate the case. The insurer may try to get certain claims dismissed against it as part of a summary judgment motion.
At the mediation, the insurance company may send a different representative than the person who initially handled the claim due to the allegations against this party. The plaintiff will also be present. Both parties may be represented by their attorneys.

During mediation, the mediator will try to improve communication between the parties and give them an opportunity to amicably resolve their case.