These terms are really very subjective which results in conflicting outcomes. I always use the court's own language to define terms.
In layman's terms Bad Faith requires fraud or deception, in other words it needs to be an intentional act.
Negligence is viewed as a mistake lacking the intention to defraud or deceive.
The difference between the two is the intent.
"Bad faith refers to dishonesty or fraud in a transaction, such as entering into an agreement with no intention of ever living up to its terms, or knowingly misrepresenting the quality of something that is being bought or sold. I t may involve an intent to deceive or mislead another in order to gain some advantage. It is often related to a breach of a the obligation inherent in all contracts to deal with the other parties in good faith and with fair dealing, such as in paying claims, or issuing a cancellation under an insurance policy. Insurers may be guilty of bad faith for failing to promptly and thoroughly investigate a claim, unreasonably delaying payment, unreasonably denying benefits to a claim, using unreasonable interpretations in translating policy language, or refusing to settle the case or reimburse you for the entirety of your loss, etc. Unless a time period for settling a claim is defined in the policy, a "reasonable time" generally applies, which is a subjective term, depending on the facts and circumstances in each case. Bad faith may also be claimed against a person who files suit solely for purposes of harassment. In this case, the defendant's attorney fees may be awarded if such bad faith motives are proven."
"...While fraud claims generally rely on a bad-faith intention by the defendant, a misrepresentation claim seeks to hold the defendant liable for the plaintiff’s damages even if the defendant did not intend to make the plaintiff do something that might be harmful or detrimental to her.
Misrepresentation may also be known as “innocent misrepresentation” or “negligent misrepresentation,” depending on the laws of the particular state that hears the case. In any misrepresentation case, the elements the plaintiff is required to prove typically include:
- the defendant made a representation of a material fact as part of making a contract between the plaintiff and the defendant,
- the representation was false when it was made,
- the plaintiff would not have entered the contract if she had known the representation was false when it was made,
- the plaintiff suffered a loss by entering into the contract, and
- the plaintiff’s loss benefited the defendant.
The primary difference between misrepresentation cases and fraud cases is that, in a misrepresentation case, the defendant was either unaware that the material fact was false (innocent misrepresentation), or the defendant did not bother to find out whether the fact was false or true (negligent misrepresentation). In a fraud case, on the other hand, the plaintiff must generally prove that the defendant knew his false statement was false." http://www.rotlaw.com/legal-library/what-is-misrepresentation/