An insurance company owes its insured a duty of good faith and fair dealing. It does not owe a third-party claimant any duty to act in good faith.
For example, if Jack runs a stop sign and hits Jill, Jack's insurance company does not owe Jill any duty to act in good faith. On the other hand, Jill's insurance company owes Jill the duty to act in good faith. Simply put, Jill's insurance company must handle her claim reasonably and in good faith. It cannot unreasonably take its financial interest over Jill's. However, that does not mean that Jill's insurance company has to pay whatever Jill thinks she should get. Jill's insurer and Jill can have legitimate, reasonable, good faith disagreements about the value of Jill's claim.
Of course, the duty of good faith applies to all types of insurance, not just automobile insurance. It applies to homeowners insurance, health insurance, life insurance, disability insurance, and others. Whether an insurance company is violating its duty of good faith depends on each unique factual situation.
If you feel that your insurance company isn't treating you fairly and is acting unreasonably, you may have an insurance bad faith case. An attorney who is knowledgeable in insurance bad faith cases can help you determine if your insurance company is acting in bad faith.