Insurance Bad Faith: What It Is and What You Need to Know

Have you ever had an issue with your insurance company? Maybe you filed a claim and it was denied, or they didn’t respond to your request for coverage. Whatever the case may be, if you feel like your insurance company is treating you unfairly, you might be dealing with something called “insurance bad faith.”

What Is Insurance Bad Faith?

Insurance bad faith is a legal term used to describe when an insurance company fails to fulfill its obligations to its policyholders. This can take many different forms, including:

Example of Insurance Bad Faith
Explanation
Denying a valid claim
An insurance company may deny a claim without a valid reason, simply to avoid paying out benefits.
Delaying payment on a claim
An insurance company may drag its feet when it comes to paying out a claim, hoping that the policyholder will give up.
Offering an unfairly low settlement
An insurance company may offer a settlement that is lower than what the policyholder is entitled to.
Canceling a policy without a valid reason
An insurance company may cancel a policy without reason, even if the policyholder has been paying premiums.

These are just a few examples of insurance bad faith. Essentially, any time an insurance company fails to uphold its end of the bargain, it could be considered bad faith.

What Are Your Rights?

If you believe that your insurance company is acting in bad faith, you have a few options. First, you should gather any evidence you have that supports your claim, such as emails or recordings of phone conversations. Then, you can contact an attorney who specializes in insurance law.

Your attorney can help you file a lawsuit against the insurance company. In some cases, simply the threat of a lawsuit is enough to get the insurance company to take your claim seriously. In other cases, you may need to take your case to court.

Keep in mind that insurance bad faith cases can be complex, and the laws surrounding them can vary depending on where you live. This is why it’s important to work with an experienced attorney who knows the ins and outs of insurance law.

FAQ

What is the statute of limitations for filing an insurance bad faith claim?

The statute of limitations varies depending on the state you live in. In some states, you may have as little as one year to file a claim. In other states, you may have up to six years. Your attorney can advise you on the specific laws in your state.

What damages can I recover in an insurance bad faith case?

If you win an insurance bad faith case, you may be able to recover damages such as:

  • The full amount of the benefits you were entitled to under your policy
  • Compensation for any financial losses you suffered as a result of the insurance company’s bad faith, such as medical bills or lost wages
  • Punitive damages, which are designed to punish the insurance company for its bad behavior

How can I avoid insurance bad faith?

The best way to avoid insurance bad faith is to choose an insurance company that has a good reputation and a history of treating its policyholders fairly. You should also make sure you understand the terms of your policy, and don’t be afraid to ask questions if anything is unclear.

What should I do if I think my insurance company is acting in bad faith?

If you think your insurance company is acting in bad faith, the first step is to gather evidence that supports your claim. Then, you should contact an attorney who specializes in insurance law. Your attorney can advise you on your options and help you take action against the insurance company if necessary.

Can I file an insurance bad faith claim if I don’t have a lawyer?

While it is possible to file an insurance bad faith claim without a lawyer, it is generally not recommended. Insurance bad faith cases can be complex, and the laws surrounding them can vary depending on where you live. An experienced attorney can navigate these complexities and help you get the compensation you deserve.

At the end of the day, insurance bad faith is a serious issue that can have a significant impact on your life. If you believe that your insurance company is not acting in good faith, don’t hesitate to take action. With the help of an experienced attorney, you can fight for your rights and get the compensation you deserve.