Insurance Bad Faith Claims

Insurance bad faith claims arise most commonly when insurance companies refuse to reasonably and fairly settle a valid insurance claim within the policy limits of that particular claim. In short, the company behaves recklessly and contrary to your rights and interests.

While the laws vary from state to state, when insurance bad faith is litigated, the penalties for an insurance company can include payment of an excess verdict beyond the policy limits, potential emotional distress losses suffered by the claimant, and in some jurisdictions, punitive damages.

Bad faith actions require the intervention of a qualified insurance bad faith litigating attorney.  But before we even consider potential legal actions, let's begin with general guidelines for the identification of bad faith claims.

Here are some of the more common activities that could be considered insurance bad faith.

1.  The insurance company fails to investigate the claim in a fair and timely manner.

2. A failure to evaluate the loss and the damages within a reasonable period of time.

3.  Following an insurance investigation, the company does not offer a valid settlement within a reasonable amount of time.

4. Delay of payments to an agreed settlement.

5.  Harassive or intimidating techniques utilized during the investigation of the claim.

6.  Failure to inform the claimant of all benefits afforded by the insurance   policy.

7.  Concealing from the insured, facts related to the claim.

8.  Altering insurance documents without the knowledge of the insured.

9.  Threats not to pay the claim.

10. Failure to adhere to the claims processes defined in the claims manual.

11. Intentional lowball offers.

The law requires that insurance companies must act in good faith.  In other words, companies cannot manufacture reasons to deny claims, nor can they implement procedures to devalue or delay claim settlements.

Not every insurance dispute rises to the level of insurance bad faith.  Clearly an insurance company has a right , an obligation to properly investigate all claims.  They have a right to ask questions, and a right to require appropriate supporting documents.  Accordingly, insureds must understand that they likewise have an obligation to cooperate with the insurance investigation.

But arguments can be made that insurance companies tend to act in their own bests interests, and when their interests conflict to the detriment of their insured's rights and benefits, insurance bad faith claims procedures can overwhelm the entire claim process.

If you suspect that you are the victim of insurance bad faith you must take action to further understand the implications of your loss. 

Begin with a simple search for your state's "Unfair Claims Settlement Practices Act".  These are standards have been implemented by the National Association Of Insurance Commissioners  and have been adopted into the laws of most all states.  These regulations place specific burdens on insurance companies specifically relating to insurance bad faith or unfair claim handling.

Your state's laws will specify the laws and procedures in place for the investigation of bad faith claims.  Understand, however, that while state laws usually incorporate penalties for unfair insurance practices, authorities are not in a position to get involved directly in your individual insurance claim.  Unfortunately, that intervention is your responsibility.