What Is Bad Faith?When an insurance company sells you an insurance policy, they are obligated by law to act in "good faith." This means that when you file a legitimate insurance claim they have to make reasonable efforts to compensate you. This duty is also referred to as the "Covenant of Good Faith and Fair Dealing." An insurance company can only deny an insurance claim if they have a made a fair and reasonably thorough investigation which showed that your claim was not covered by the insurance policy.
If your insurance company denied a claim without properly investigating it or acted unreasonably, then they have acted in "bad faith." Bad faith applies to just about every type of insurance policy, including automobile insurance, commercial insurance, health insurance, life insurance, and property insurance. How Can I Tell if My Insurance Company has Acted in Bad Faith?There are several warning signs that may suggest your insurance company is acting in bad faith: - Denying a claim without giving a reason
- Failing to conduct a reasonably thorough investigation of your claim
- Offering you less money than they know the claim to be worth
My Insurance Company has Acted in Bad Faith, What Should I Do?If you believe your insurance company has denied a claim in bad faith, the first thing you should do is appeal the denial. Most insurance companies have an appeal process that you can use to get your insurance company to reconsider your claim. This option is available to you even if you believe your insurance company was acting in good faith.
The next thing to do is to file a lawsuit against the insurance company. Insurance companies are often afraid of bad faith lawsuits because the insured can get "punitive damages" in addition to the value of the claim. Punitive damages are large amounts of money intended to punish the insurance company when they act in a particularly unfair way. Do I Need an Attorney 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 attorney 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 against your insurance company.
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