Questions About Bad Faith Insurance
Insurance laws are complex, and insurers have amassed a wide range of strategies and tactics in the effort to get around them. A basic definition of insurance bad faith — the insurer’s knowing, willful avoidance of a contractual obligation — may create more questions than it answers for anyone dealing with a wrongful claim denial or other insurance dispute.
How can I determine if my insurance company is acting in bad faith?
If you believe your important, high-value insurance claim has been denied unfairly, your best next step is to contact a lawyer with extensive insurance knowledge and a track record of success in litigation. The same is true if you are “getting nowhere” with a claim due to lengthy delays in investigation or processing, or if you have been offered a seriously inadequate settlement.
Do laws against insurance bad faith exclusively or primarily pertain to specific types of insurance?
No. All insurance companies have a duty of good faith and fair dealing to their customers. Bad faith claims arise across the spectrum of insurance coverage types, policies and claims, from auto accident cases to sinkhole and other property damage claims under homeowners policies, and from disability and life insurance to various types of business insurance.
Why do insurance companies knowingly break the law and risk having to pay additional bad faith damages in addition to the value of claims?
The most direct answer to this question is that insurance companies are intensely focused on profitability, and this provides incentive to find (or manufacture) reasons to deny and underpay claims. Further, insurers exploit the fact that most people do not understand complex policy language, do not know all their rights, and may simply give up in the face of a claim denial or other resistance.
Why is it sometimes important to prove insurance bad faith was a factor in a claim denial or delay?
Under certain circumstances — as when the policyholder suffers additional damages because of the insurer’s actions — proving insurance bad faith results in an award, which includes damages in addition to the claim value, including payment of the wronged policyholder’s attorney fees associated with the case.
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