Bad Faith Insurance Complaint - Maryland

BAD FAITH INSURANCE COMPLAINT — MARYLAND

TABLE OF CONTENTS

1. Maryland Bad Faith Framework Overview
2. Pre-Filing Checklist
3. PART A — § 27-1001 Complaint to the MIA
4. PART B — Civil Complaint in Circuit Court
5. Damages Worksheet
6. Maryland Practice Notes
7. Sources and References

1. MARYLAND BAD FAITH FRAMEWORK OVERVIEW

Maryland law on first-party insurance bad faith is governed by an integrated statutory scheme:

• Md. Code Ann., Ins. § 27-1001 — Mandates that an insured first file a complaint with the Maryland Insurance Administration ("MIA") before bringing a civil action under § 3-1701. The MIA decides (i) whether the insurer was obligated to cover the loss, (ii) whether the insurer breached that obligation, (iii) whether the insurer failed to act in good faith, and (iv) damages, expenses, litigation costs, and interest.
• Md. Code Ann., Cts. & Jud. Proc. § 3-1701 — Authorizes a civil action by an insured against a property/casualty or individual disability insurer for failure to act in good faith. Recoverable: actual damages (up to policy limits), expenses and litigation costs (including attorney's fees not to exceed one-third of actual damages), and interest.
• "Good faith" defined — "An informed judgment based on honesty and diligence supported by evidence the insurer knew or should have known at the time the insurer made a decision on a claim." Md. Code Ann., Cts. & Jud. Proc. § 3-1701(a)(4).
• Common-law tort bad faith generally unavailable for first-party coverage denials. Allstate Ins. Co. v. Atwood, 319 Md. 247, 572 A.2d 154 (1990); Mesmer v. Maryland Auto. Ins. Fund, 353 Md. 241, 725 A.2d 1053 (1999).

2. PRE-FILING CHECKLIST

☐ Confirm the policy is a first-party property/casualty OR individual disability policy issued, sold, or delivered in Maryland.

☐ Confirm the claim is not within an exception (small claim, written waiver, or commercial policy with limits > $1,000,000).

☐ Gather: policy (declarations + form), proof-of-loss submissions, denial/reservation letters, claims correspondence, repair/medical/appraisal estimates, photographs, expert reports, and any sworn statements taken.

☐ Confirm any contractual conditions precedent are satisfied: examination under oath ("EUO"), sworn proof of loss within policy time, cooperation, mitigation, and (if applicable) appraisal demand.

☐ Confirm the statute of limitations has not run (three years from breach for the contract action; § 27-1001 administrative complaint must be filed within statutory time).

☐ Calculate actual damages, expenses (including reasonable attorney's fees, capped at one-third of actual damages), litigation costs, and interest.

☐ Determine the applicable MIA filing form (the MIA publishes a § 27-1001 Complaint Information Sheet) and prepare narrative.

3. PART A — § 27-1001 COMPLAINT TO THE MIA

MARYLAND INSURANCE ADMINISTRATION

Property & Casualty Complaint Unit / § 27-1001 Filings

200 St. Paul Place, Suite 2700

Baltimore, MD 21202

Date: [__/__/____]

RE: COMPLAINT UNDER MD. CODE ANN., INS. § 27-1001 — FAILURE TO ACT IN GOOD FAITH ON FIRST-PARTY CLAIM

3.1 Statement of Facts

1. Complainant [INSURED] is the named insured under the above-referenced policy issued, sold, or delivered in Maryland.

2. On [DATE OF LOSS], Complainant suffered a covered first-party loss, specifically: [DESCRIBE LOSS — e.g., wind/hail damage to roof; theft of jewelry; total loss by fire; period of disability commencing __/__/____].

3. Complainant timely reported the loss on [DATE] and submitted a [Sworn Proof of Loss / completed claim form / estimate] on [DATE], attaching [INVENTORY / ESTIMATES / MEDICAL RECORDS / PHYSICIAN STATEMENTS].

4. The insurer assigned Claim No. [CLAIM NO.] and adjuster [NAME] on [DATE].

5. Despite proof of loss and full cooperation by Complainant, on [DATE] the insurer [denied the claim / paid only $______ / failed to issue any coverage decision within the time required] stating: "[QUOTE INSURER'S STATED REASON]."

6. The insurer's stated reason is unsupported by the policy, the facts, or any reasonable investigation, in that [EXPLAIN — e.g., the cited exclusion does not apply because ____; the engineering report relied on by the insurer was contradicted by ____; the disability definition was satisfied by ____].

3.2 Failure to Act in Good Faith — Specific Breaches

The insurer failed to act in good faith within the meaning of Md. Code Ann., Cts. & Jud. Proc. § 3-1701(a)(4) and Md. Code Ann., Ins. § 27-303(9) by, inter alia:

☐ Failing to conduct a reasonable, prompt, and thorough investigation;

☐ Misrepresenting policy provisions or coverage applicable to the claim (Ins. § 27-303(1));

☐ Refusing to pay the claim for an arbitrary or capricious reason based on all available information (Ins. § 27-303(2));

☐ Failing to settle promptly when liability was reasonably clear under one part of the policy in order to influence settlement under other parts (Ins. § 27-303(5));

☐ Failing to provide a reasonable explanation of the basis for denial of the claim (Ins. § 27-303(6));

☐ Relying on a one-sided or pretextual engineering, medical, or accounting report;

☐ Compelling Complainant to institute litigation by offering substantially less than amounts ultimately recoverable;

☐ Other: [DESCRIBE].

3.3 Damages Sought

3.4 Documents Enclosed (Required by § 27-1001(b))

☐ Certified copy of the policy (declarations and form), endorsements, and applicable riders;

☐ All proofs of loss, sworn statements, and supporting documentation submitted to the insurer;

☐ All correspondence to and from the insurer regarding the claim;

☐ Estimates, invoices, photographs, expert reports, and medical records (as applicable);

☐ Insurer's denial or partial-payment letter(s);

☐ Statement of actual damages and computation;

☐ § 27-1001 Complaint Information Sheet (MIA form).

3.5 Verification of § 27-1001 Complaint

I, [INSURED NAME], declare under the penalties of perjury that the contents of the foregoing § 27-1001 Complaint are true and correct to the best of my knowledge, information, and belief.

[________________________________]

[INSURED NAME]

Date: [__/__/____]

4. PART B — CIVIL COMPLAINT IN CIRCUIT COURT

IN THE CIRCUIT COURT FOR [COUNTY], MARYLAND

CASE NO. [________________________________]

COMPLAINT (BREACH OF INSURANCE CONTRACT AND FAILURE TO ACT IN GOOD FAITH UNDER MD. CODE ANN., CTS. & JUD. PROC. § 3-1701)

JURY TRIAL DEMANDED

Plaintiff [INSURED], by undersigned counsel, brings this action against Defendant [INSURER] and alleges:

4.1 Parties, Jurisdiction, and Venue

1.1. Plaintiff is a citizen and resident of [COUNTY], Maryland.

1.2. Defendant is a [STATE] insurance company authorized to and doing business in Maryland and may be served via the Maryland Insurance Commissioner pursuant to Md. Code Ann., Ins. § 4-107, or upon its resident agent, [RESIDENT AGENT NAME AND ADDRESS].

1.3. The amount in controversy exceeds $30,000.00, vesting jurisdiction in this Court. Md. Code Ann., Cts. & Jud. Proc. § 4-401, § 1-501.

1.4. Venue is proper in [COUNTY] under Md. Code Ann., Cts. & Jud. Proc. § 6-201 and § 6-202 because Defendant carries on a regular business there and the cause of action arose there.

4.2 Conditions Precedent — § 27-1001 Exhaustion

2.1. On [DATE], Plaintiff filed a complaint with the Maryland Insurance Administration ("MIA") under Md. Code Ann., Ins. § 27-1001 (MIA File No. [####]), thereby satisfying the administrative-exhaustion prerequisite to this action under Md. Code Ann., Cts. & Jud. Proc. § 3-1701(d)(1).

2.2. On [DATE], the MIA issued its decision (attached as Exhibit 1) finding [summarize findings — e.g., that the insurer was obligated under the policy to pay the claim; that the insurer breached that obligation; that the insurer did/did not act in good faith; and the amount of damages].

2.3. This action is timely filed within the period prescribed by Md. Code Ann., Cts. & Jud. Proc. § 3-1701 and is exempt from / not exempt from any further administrative requirements.

4.3 Background Facts

3.1. At all relevant times, Defendant insured Plaintiff under Policy No. [POLICY NO.] (the "Policy"), a true and correct copy of which is attached as Exhibit 2.

3.2. The Policy was a [homeowners / commercial property / auto physical damage / individual disability] policy issued, sold, or delivered in Maryland.

3.3. On [DATE OF LOSS], Plaintiff sustained a covered loss, specifically: [DESCRIBE LOSS].

3.4. Plaintiff timely reported the loss, cooperated fully with Defendant's investigation, submitted all required proofs, and otherwise satisfied all conditions precedent under the Policy.

3.5. On [DATE], Defendant [denied the claim / paid only $______ / refused to make any decision], stating "[QUOTE]."

3.6. Defendant's denial / underpayment was contrary to the plain terms of the Policy and contrary to the evidence Defendant knew or should have known at the time it made its decision.

4.4 COUNT I — BREACH OF CONTRACT

4.1. Plaintiff realleges Paragraphs 1.1 through 3.6.

4.2. The Policy is a valid and enforceable contract of insurance.

4.3. Plaintiff has performed all conditions precedent or such conditions have occurred or been waived.

4.4. Defendant breached the Policy by failing and refusing to pay the covered loss in accordance with its terms.

4.5. As a direct and proximate result, Plaintiff has sustained damages in an amount equal to the unpaid covered loss, plus consequential damages, pre-judgment interest at the legal rate, and costs.

4.5 COUNT II — FAILURE TO ACT IN GOOD FAITH (Md. Code Ann., Cts. & Jud. Proc. § 3-1701; Md. Code Ann., Ins. § 27-1001 / § 27-303(9))

5.1. Plaintiff realleges Paragraphs 1.1 through 4.5.

5.2. The Policy is a property/casualty or individual disability policy within the scope of § 3-1701.

5.3. Defendant failed to act in good faith — i.e., failed to make an informed judgment based on honesty and diligence supported by the evidence Defendant knew or should have known at the time of its decision — by, among other things:

• Failing to conduct a reasonable, timely, and unbiased investigation;
• Relying on a pretextual or one-sided expert opinion;
• Misconstruing or misapplying policy language and exclusions;
• Refusing to communicate the bases for denial;
• Compelling Plaintiff to institute litigation to recover amounts plainly due;
• [OTHER SPECIFIC CONDUCT].

5.4. Defendant's failure to act in good faith was the direct and proximate cause of Plaintiff's actual damages, expenses, and litigation costs.

5.5. Pursuant to § 3-1701(d), Plaintiff is entitled to recover: (a) actual damages up to the applicable policy limit; (b) expenses and litigation costs, including reasonable attorney's fees not to exceed one-third of actual damages recovered; and (c) interest on the expenses and costs.

4.6 PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully demands judgment against Defendant as follows:

• A. Actual damages in an amount to be proven at trial, up to the applicable Policy limits;
• B. Expenses and litigation costs, including reasonable attorney's fees not to exceed one-third of the actual damages recovered, pursuant to Md. Code Ann., Cts. & Jud. Proc. § 3-1701(d);
• C. Pre-judgment and post-judgment interest at the legal rate;
• D. Costs of suit; and
• E. Such other and further relief as the Court deems just and proper.

4.7 DEMAND FOR JURY TRIAL

Plaintiff demands trial by jury on all issues so triable as a matter of right pursuant to Md. Rule 2-325.

4.8 Signature Block

Date: [__/__/____]

Respectfully submitted,

[LAW FIRM NAME]

By: [________________________________]

[ATTORNEY NAME], AIS / CPF No. [#########]

[STREET ADDRESS]

[CITY, MD ZIP]

Telephone: [PHONE]

Email: [EMAIL]

Counsel for Plaintiff

4.9 Certificate of Service

I hereby certify that on [__/__/____], a copy of the foregoing Complaint was served upon the following via [MDEC e-service / Maryland Insurance Commissioner / certified mail RRR]:

[SERVICE LIST WITH ADDRESSES]

[________________________________]

[ATTORNEY NAME]

5. DAMAGES WORKSHEET

6. MARYLAND PRACTICE NOTES

• MIA exhaustion is mandatory and strict. Failure to file a § 27-1001 complaint with the MIA before suing under § 3-1701 will result in dismissal absent a statutory exception (small-claim jurisdiction, written waiver, or commercial policy > $1,000,000). Counsel should file the MIA complaint as soon as a denial issues to preserve rights and start the 30/90-day clocks.
• Scope of § 3-1701 / § 27-1001. The statutory bad-faith remedy applies only to first-party property/casualty and individual disability policies issued, sold, or delivered in Maryland. It does NOT apply to liability (third-party) coverage, group ERISA disability, or health-insurance utilization-review disputes (which have separate processes under Title 15).
• Common-law bad faith largely foreclosed for first-party coverage denials. Allstate Ins. Co. v. Atwood, 319 Md. 247, 572 A.2d 154 (1990) (no general tort of bad faith for breach of insurance contract); Mesmer v. MAIF, 353 Md. 241, 725 A.2d 1053 (1999). Pleading a separate common-law tort count for first-party denial invites a motion to dismiss.
• Third-party excess-verdict bad faith remains a contract-based claim. Where an insurer fails to settle within policy limits and an excess judgment results, the insured may recover the excess as consequential contract damages — but Maryland has not adopted a freestanding tort of bad-faith failure to settle.
• Attorney's-fee cap. § 3-1701(d) caps statutory attorney's fees at one-third of actual damages recovered. Build the fee theory and timekeeping accordingly.
• Pleading the MIA decision. Although the MIA decision is not res judicata in the Circuit Court action, attach it as an exhibit. The court reviews coverage and good-faith issues de novo, but MIA findings are persuasive.
• Appraisal vs. § 27-1001. Appraisal under Md. Code Ann., Ins. § 27-605 resolves only disputes over amount of loss, not coverage or bad faith. An appraisal demand does not satisfy or substitute for § 27-1001 exhaustion.
• Statute of limitations. Three years for breach of contract under Md. Code Ann., Cts. & Jud. Proc. § 5-101. The § 27-1001 administrative process tolls or interrupts the limitations period under § 3-1701(d)(2)–(3) — verify timing carefully.
• Removal risk. If the insurer is a non-Maryland citizen and amount-in-controversy exceeds $75,000, the action is removable to the U.S. District Court for the District of Maryland under 28 U.S.C. § 1332. Plead carefully if forum matters.

7. SOURCES AND REFERENCES

• Md. Code Ann., Ins. § 27-1001 — https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gin&section=27-1001
• Md. Code Ann., Cts. & Jud. Proc. § 3-1701 — https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gcj&section=3-1701
• Md. Code Ann., Ins. § 27-303 (Unfair Claim Settlement Practices) — https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gin&section=27-303
• Md. Code Ann., Ins. § 27-605 (Appraisal) — https://codes.findlaw.com/md/insurance/md-code-ins-sect-27-605.html
• Maryland Insurance Administration — Insurer Good Faith Requirements: https://insurance.maryland.gov/Pages/insurer-good-faith-requirements.aspx
• MIA — A Guide for Consumers Filing a § 27-1001 Civil Complaint: https://insurance.maryland.gov/Consumer/Documents/27-1001Guide.pdf
• MIA — § 27-1001 Complaint Information Sheet: https://insurance.maryland.gov/Consumer/Documents/27-1001-Complaint-Information-Sheet-form.pdf
• Allstate Ins. Co. v. Atwood, 319 Md. 247, 572 A.2d 154 (1990)
• Mesmer v. Maryland Auto. Ins. Fund, 353 Md. 241, 725 A.2d 1053 (1999)
• Allstate Ins. Co. v. Campbell, 334 Md. 381, 639 A.2d 652 (1994) (third-party duty to settle)
• COMAR 31.15.07 (MIA implementing regulations)

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. An attorney licensed in Maryland must review and customize this document before use. Maryland's bad-faith statutory framework requires strict compliance with the MIA administrative process; failure to exhaust will result in dismissal. Verify all citations and current MIA forms before filing.