What is Bad Faith?
Overview
As an insured, you pay a certain amount to your insurer and they are liable for every accident that happens while you are insured. Often times, we see that these insurance companies fail to hold up their end of the bargain, leaving the insured stranded and defrauded of their hard earned cash. This is where bad faith comes in. Yes, suing your insurance company may seem daunting but it is your best shot at getting what you deserve and even more. It is your right, therefore, get a good lawyer and claim it.
What is Bad Faith and Bad Faith Insurance Laws?
Generally, bad faith is a legal term used to describe a situation where one party intentionally and maliciously refuses to keep up his end of a bargain. This fraudulent deception is usually aimed at causing harm to the other party. While bad faith insurance laws, on the other hand, are state laws that are made to protect the insured from dishonest practices by insurance companies. These laws help protect the right of consumers when they are being treated in bad faith.
What Constitutes Bad Faith Insurance?
These insurance companies can be crafty sometimes and you are stuck in the middle unable to decide if you are treated fairly or not. Whether a tort or a breach of contract, such insurance company should answer to the law. These are some of the cases that show an insurance company is acting in bad faith.
- Misleading the insured with false information.
- Refusing to make honest efforts to investigate your claim.
- Willful denial of policyholders claim.
- Delayed settlement offer.
- Mismanagement during the claim process.
- Abrupt termination of the insured policy after filling a claim.
- Deceitfully adjusting a claim.
- Delayed response to a claim.
- Inability to provide logical reasoning for denying your claim.
- Complete lack of settlement offer.
Duties of Insurance Companies
Insurance companies are responsible for a number of duties which must be performed to keep a healthy contract. In cases where they fail to perform any of these duties, the customer can build a valid claim against them. The basic duties are as follows.
- To Investigate Claims: It is the duty of every insurer to conduct a proper investigation of policyholders’ claim as soon as possible and to provide their findings to the affected customers. Failure to do this may result in a bad faith claim. Also, unnecessary delay of the investigation process is considered as an act of bad faith.
- To Compensate for Loss: Losses incurred by the insured should be compensated for by the insurer. An insurance company who fails to pay the settlement agreement entered against the policyholder has breached the terms of the contract as such it should be sued for bad faith.
- To Defend the Policyholder: It is also the duty of an insurance company to protect their customers by defending them against claims. Failure to defend a policyholder is accounted as an act of bad faith.
- To Settle Logically: In some cases, the defaulted insurance company may refuse to settle with the aim of spending less when the case gets to court. They know the lawsuit would expose them to damages beyond the limits of the policy and settling would be advantageous to the insured. In this case, the insurer is acting on bad faith.
How to Prove Bad Faith
Due to the amount of loss a defaulted insurance company may incur, they tend to fight hard to deny and bad faith allegation leveled against them. Thus, the need to prove bad faith. It is advisable to hire a bad faith insurance lawyer who will help build your case by the following.
- Gathering official documents which shows the difference in time between the date you filed your claim and the date the insurance company responded.
- Giving professional advice on the monetary worth of your claim.
- Reviewing the initial policy to know if it covers your claim.
- Striking a proper settlement bargain with the defaulted insurance company.
- And by taking the case to trial if the settlement bargain is not successful.
Damages You May Receive
As scary as suing your insurance company may be, there are lots of benefits that come with it if you eventually won the case. As a result, the insurance company is made to pay damages below.
- Attorney fees
- The total amount of money your claim is worth
- Court fees
- Other necessary damages stipulated by the court
