What is a bad faith insurance claim and how is it different from just having a claim denied in Ontario?

A denied claim, on its own, just means the insurer decided your loss isn't covered - and if that decision is wrong, your remedy is a straightforward breach of contract claim for the amount the policy should have paid. Bad faith is a separate and higher bar: it targets how the insurer handled your claim, not just whether the ultimate decision was correct. To succeed, you generally need to show the insurer acted unfairly or unreasonably in the claims process itself - things like failing to investigate properly, unreasonable delay, misrepresenting the policy, or using unfair tactics to pressure you into accepting less than you're owed.

An honest, reasonable decision that later turns out to be wrong is not bad faith; insurers are entitled to dispute genuinely uncertain claims. What matters is the manner of the investigation and decision-making, not just the outcome. Because bad faith can support damages beyond the policy proceeds themselves, including for the way the process affected you, it's treated as a more serious and harder-to-prove allegation than an ordinary coverage dispute, and it usually requires detailed evidence about exactly how the insurer handled your file from start to finish.