People carry insurance to protect themselves in the event of an emergency. As a policyholder, you have the legal right to receive compensation from insurance companies when you make a legitimate claim. In most cases, insurance companies act in good faith, meaning they deal fairly with the insured person. This does not necessarily mean the companies award full damages in claims. In other cases, the insurance company refuses to make a reasonable settlement offer which the policyholder wants, this is when you want to contact a bad faith insurance attorney.
An insurance policy is a contract between the insurance company and the policyholder and both parties must follow the terms of the contract. Insurance bad faith refers to situations when the insurance company looks for ways to escape its obligation to investigate a claim or pay the insured. When this occurs, in most states the policyholder is legally permitted to file a lawsuit against the insurance company for damages that should have been paid on the claim. Additional expenses, such as court costs and attorney fees, may also be awarded.
Examples of Bad Faith Insurance Claims
Insurance companies can get sued for any number of actions or inactions regarding claims:
- Undue delay in claim handling
- Unwarranted denial of coverage
- Failure to communicate pertinent information to the claimant
- Inadequate investigation
- Refusal to pay the claim without investigating
- Failure to attempt to come to a fair and reasonable settlement when liability is clear
- Refusal to make a reasonable settlement offer (“low-balling”)
- Failure to promptly provide a reasonable explanation for denial of a claim
- Failure to enter into any negotiations for settlement of the claim
- Failure to respond to a time-limit demand
- Failure to disclose policy limits
- Refusal to defend a lawsuit
- Threats against the insured
How Do You Prove Bad Faith Insurance?
Laws regarding bad faith insurance are constantly shifting and changing, and insurance law varies from state to state. However, it is generally agreed that a company has acted in bad faith if it has no reasonable basis for claim denial, the company refuses to investigate or process a claim, or the company acted with careless disregard of the policyholder’s rights. There are many different variables in a claim of this nature, and a qualified bad faith attorney can help you examine your unique situation.