INSURANCE DENIAL or BAD FAITH
Unreasonable Denial of Benefits
Insurance bad faith describes a claim that an insured person may have against an insurance company for its bad acts. Insurance companies agree in the contract which they sign with their insureds or policy holders to act with good faith and fairness in paying claims on the behalf of policy holders.
This duty or “implied covenant of good faith and fair dealing” automatically exists in every insurance contract. If an insurance company violates this covenant, the insured person or policy holder may sue the insurance company for damages.
These suits occur most commonly when an insurance company unfairly or unjustly denies benefits or denies a claim made by a policy holder. The insurance company may deny benefits or a claim altogether or only make a partial payment of what is owed.
Possible punitive damages award
Additionally, if an insurance company acts in bad faith, the policyholder may collect more than what is contractually owed under the policy. Generally, the more at fault the insurer’s conduct, the greater the damages a policy holder may be awarded.
The following situations may be a basis for a bad faith claim:
The unreasonable denial of benefits
Refusal to pay full benefits
Delay in the processing of a claim or of a payment of benefits for an unreasonable period of time
Failure to fully and thoroughly investigate a claim
Misinterpreting the nature and scope of a
policy holder’s benefits
Refusal to defend a policy holder in a lawsuit
It is extremely important to seek the advice of an experienced and knowledgeable attorney when you are in legal trouble. If you have been the victim of a personal injury due to the negligence, carelessness or abuse of another person, please contact us today to discuss your legal options.