Why the first number is rarely the real number
Insurance adjusters routinely open negotiations with a conservative figure, expecting a counteroffer. Accepting that first offer typically closes the claim permanently — there's generally no going back to ask for more later, even if additional injuries or costs surface afterward.
A genuine bad faith tort, born from a comparative-fault dispute
In Erie Insurance Co. v. Hickman, 622 N.E.2d 515 (Ind. 1993), the Indiana Supreme Court held that an insurer's breach of its duty of good faith gives rise to an independent tort, separate from an ordinary breach of contract claim. Fittingly, the case itself turned on a fault dispute: the insurer had investigated a collision, concluded the claimant was more than 50% at fault under Indiana's comparative fault law, and denied the uninsured motorist claim on that basis.
A demanding standard, not an easy one
To win a bad faith claim in Indiana, a policyholder must show conscious wrongdoing by clear and convincing evidence — the Indiana Supreme Court's own language requires "dishonest purpose, moral obliquity, furtive design or ill will." A good faith dispute over liability, even one that later turns out to be wrong, doesn't by itself establish bad faith.
The insurer actually won on the facts
It's worth knowing how the Hickman case itself came out: the Indiana Supreme Court held that the insurer's investigation-based fault determination, even though later disputed, reflected a genuine good faith dispute rather than bad faith, and reversed the punitive damages award against the insurer. The tort exists in Indiana, but it's a real standard to meet, not a label that attaches to every denial that later proves wrong.
What this means practically
Because the standard turns on the insurer's state of mind and process, documentation matters: a clear record of what evidence you provided, when, and how the insurer responded is exactly what a bad faith claim would need to rest on. Comparing the insurer's offer against your own complete, well-documented tally of damages before responding is the practical step this framework rewards, regardless of whether bad faith ultimately comes into play.