Insurance Bad Faith Examples
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What Is an Example of Denying a Claim without Giving a Reason?
In Louisiana, an insurance company was found to be in bad faith when it did not pay medical expenses under a worker's compensation claim. No reasonable explanation was provided for the denial of the claim. The company's failure to pay the expenses in a timely manner was considered bad faith.
What Is an Example of Failing to Conduct a Reasonable Investigation?
A showing of an insurance company's disregard of facts or proof can support a claim of bad faith.
- Though an insurance company inspected property destroyed by a fire, it did not investigate to determine the cause of the fire. Rather, the company baselessly accused its client of arson and denied the claim. A Nebraska court found the insurance company acted in bad faith.
- An insurance company was found to be in bad faith when a worker's compensation claim was denied based on an arbitrary decision by a claims adjuster. The claims adjuster reclassified the claimant's condition from "injury" to "non-confining illness" after reading medical records, though he had neither spoke to the claimant's doctors nor called for an independent medical examination. The company offered three months' compensation. The claimant, who was unable to return to work, was seeking permanent disability benefits.
- A California court found that a commercial insurance provider of general liability insurance acted in bad faith when it did not honestly evaluate its client's vulnerability to liability to third persons. The company also failed to accurately determine its indemnity obligation and limited its settlement under mistaken information.
What Is an Example of Offering Less Money than They Know the Claim is Worth?
A title insurance company in California was found to be in bad faith because of its successive attempts to evade responsibility for its obvious negligence. The company failed to disclose about an easement on the insured's property. (See Title and Boundary Disputes.) When the insured discovered the easement, an appraiser estimated a loss of nearly $63,000. The insurance company first denied liability. It later offered to settle for a nominal amount. It finally conducted an appraisal of the loss but only after a court found it liable.
What Can I Recover if I Sue my Insurer for Bad Faith?
In addition to an award to cover your losses as a result of the insurance company's bad faith, some states also award punitive damages on your behalf. Punitive damages are awarded as punishment for the bad faith and are meant to discourage similar behavior in the future.
- In the District of Columbia, punitive damages were awarded because a health insurer denied a claim for treatment though it had not investigated to determine whether the claimant was exempt from a "preexisting condition" limitation.
- In California, punitive damages were awarded because a car insurance company failed to diligently settle the insured's uninsured motorist's claim. The company refused to compensate the client, though it did not have nor provide the reason for denial of the claim.
Do I Need a Lawyer to Help Me with My Bad Faith Claim?
Bad faith claims are often hard to prove and difficult to pursue. Additionally, the laws that determine what bad faith is vary from state to state. An experienced lawyer will know how to prove that an insurance company acted in bad faith, and properly evaluate the value of your case. A lawyer can also help you navigate through the complicated legal process if you need to bring a lawsuit.
Consult a Lawyer - Present Your Case Now!
Last Modified: 12-04-2013 10:59 AM PST
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