What Is Bad Faith in Insurance Contracts?Insurance companies frequently withhold policy benefits from beneficiaries and without just cause. However, every insurance contract or policy has an implied covenant to act in good faith. This means it will act in a reasonable and prudent manner toward your claims. What Steps Can I Take?
Insurance companies that act in bad faith can have several steps taken against it. These include: - Writing a letter to your insurance company stating why you believe you are entitled to payment
- Notify the insurance commissioner in your state and indicate the bad practices of the insurance company
- Document all steps taken to provide good evidence of the bad faith of the insurance company ¿ this might prove invaluable later in court
- Contact an attorney
Why Do Insurance Companies Act in Bad Faith?
Insurance companies have a strong incentive make a profit. Therefore, the less they pay, the more profits are increased. In addition, many policy holders don¿t want to fight insurance companies, allowing insurance companies to exercise these bad faith practices. Insurance companies have been getting away with it for years and it will continue in the future. Do Insurance Companies Have a Right to Deny a Claim?Insurance companies do have a right to deny a claim if an insured hasn¿t complied with the written terms of a contract. For instance, continuous late payments on the part of a policy holder might justify an insurance company withholding payment on a claim. In addition, if the insurance company believes in good faith the claim to be fraudulent, it can justifiably withhold payment and might bring its own cause of action against the policy holder. Should I Hire an Attorney?An experienced insurance attorney can help assist the claimant to recover the amount due in his claim. In addition, if it should become necessary for litigation, an experienced attorney can help bring a case against the insurance company and recover damages. |
