Bad Faith Insurance Lawsuits

An insurance policy is a contract that requires an insurance company to act in good faith toward the policyholder. “Good faith” is a legal concept assumed in every insurance contract. When an insurer refuses benefits to a policyholder with a legitimate claim, it is considered “bad faith.” However, your insurance provider has a right to deny your claim if your claim does not fall within the scope of your policy. It is challenging to distinguish between a bad faith denial and a legitimate denial.

This article provides an overview of bad-faith insurance law. Every insurance policy and everyone’s circumstances are different. If an insurance company has denied your claim in bad faith, contact a local bad-faith insurance law attorney.

What Are Examples of Bad Faith?

When an insurance company acts in bad faith, it fails to uphold its contractual obligations. Insurance contracts have an implied covenant of good faith and fair dealing. This misconduct can take various forms. The insurance carrier can act in bad faith for a trivial reason, give you unnecessary paperwork, or repeatedly ask for independent doctors to examine you. All of these negatively affect you and other policyholders who rely on their insurance coverage for protection.

These are some hypothetical examples that illustrate how an insurance company might act in bad faith:

  • Unjustified claim denial: You file a homeowners’ insurance claim after a fire severely damages your home. The insurance company denies the claim without a valid reason, even though you provided all the necessary property damage documentation.
  • Deliberate delays: After a car accident, you submit a claim to your car insurance provider for vehicle repairs. The insurance company repeatedly requests additional documentation. This causes unnecessary delays in claim processing.
  • Lowball settlement offers: You suffer significant injuries in a slip-and-fall accident. Sarah files a claim with the property insurance provider. The insurance company offers a settlement far below the actual medical bills and costs. This forces Sarah to seek legal action to receive fair compensation.
  • Misrepresentation of coverage: Your business suffers significant losses after a burglary covered by your insurance, but your insurance company claims the policy does not cover theft. However, the agent assured you otherwise when purchasing the policy.
  • Failure to investigate: A fire damages your home. You file a claim with the insurance company. The insurer denies the claim without conducting an investigation and determines arson is the cause of the fire, which is something not covered in the policy.

These examples demonstrate how insurance companies can act in bad faith, undermine policyholders’ trust, and cause financial losses.

How Much Can You Get in a Bad Faith Lawsuit?

The damages you can collect in a successful lawsuit will vary depending on your injuries and the damages you can prove. If you sue your insurance company and win, you will likely receive the benefits under your policy. You may also get additional money for losses or damages you’ve suffered. In some cases, you can also recover attorney fees.

Sometimes, plaintiffs who win lawsuits against their insurance companies for bad faith denial will receive additional damages for emotional distress. In some jurisdictions, exceptionally unreasonable and egregious bad faith claim denials can also result in punitive damages.

What Do I Need To File A Claim?

Before you begin, you should ensure you have all your medical records and a copy of your insurance policy. Filling out a form incorrectly or giving incorrect information can result in your claim being denied. State law determines much of insurance law and the procedures for breach of contract actions. After filing a valid claim and getting a denial, contact a lawyer.

What if My Insurance Company Is Unfair in Settling My Personal Injury Claim?

You can settle a personal injury claim with your insurance company. However, if you are not getting a fair settlement offer, you should consult an attorney. Personal injury attorneys have experience dealing with insurance companies and settling injury insurance claims. They will fight to get you the compensation you deserve, even if it does not qualify as a bad faith denial.

What Do I Do if I Think My Insurance Company Is Acting in Bad Faith?

First, you should review your insurance policy. Whether it’s liability insurance, life insurance, or health insurance, review the policy terms. Check the policy provisions and disclaimers to make sure the policy covers your claim.

If you still think the insurance company is acting in bad faith, you can start with an appeal. Collect all of your documentation (medical records, insurance policy, repair bills, and all communications). You can appeal the decision with the insurance company.

If you have specific questions about your situation, you should contact a local and experienced bad-faith insurance lawyer. They will assess your situation and offer legal advice. A lawyer can help you determine what your next steps should be.

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