WASHINGTON — Legislators in a dozen states have introduced insurance bad faith bills in early 2026, responding to constituent complaints about insurance carrier delays, underpayments, and denials following major disasters in 2025 and early 2026.
The bills vary in their specific provisions but generally would require carriers to acknowledge claims within 10 business days, complete investigations within 30 days, and pay or deny claims within 45 days. Carriers that fail to meet these deadlines would face penalties including interest on delayed payments and, in some bills, punitive damages.
Insurance industry representatives have opposed the legislation, arguing that existing state insurance regulations already require prompt claim handling and that additional penalties would increase litigation costs that would ultimately be passed on to policyholders through higher premiums.
Consumer advocates and restoration industry organizations have supported the legislation, noting that carrier delays in paying restoration claims leave homeowners in damaged properties for months and force contractors to carry the cost of completed work while waiting for payment.
Florida, which enacted significant insurance reform legislation in 2022 and 2023, is watching the bad faith debate in other states closely. Florida's reforms eliminated the one-way attorney fee provision that had been used to pursue bad faith claims, and consumer advocates argue that the reform has left policyholders without an effective remedy for carrier misconduct.
