When it comes to claiming settlements, insurance companies are always in the driver’s seat. They have greater financial resources, negotiating strength, and expertise than the policyholder. Keeping that in mind, courts are obliged to practice fair dealing and good faith in every insurance policy. If your insurance company is unfair and does not act reasonably in paying, processing, or investigating your claim, you have every right to sue them.
In this blog post, we will take a look at the elements of a bad faith claim and understand what they are.
What Is Bad Faith Insurance?
Bad faith insurance basically refers to a situation where an insurance company refuses to investigate or pay a legitimate claim within the stipulated time period. If an insurer does not respond on time to a policyholder’s claim or misrepresent an insurance contract’s language, the act of negligence (whether it is willful or not) is regarded as bad faith. Insurance companies also act in bad faith when they fail to disclose the terms and conditions of the policy prior to purchase and make unreasonable demands to prove a covered loss.
How Do You Know If You Have a Legitimate Bad Faith Insurance Claim?
Remember, every claim that is ever denied is not a bad faith claim. There are situations where your policy may not qualify for coverage. You must thoroughly review your insurance policy if you are ever in doubt. Insurance contracts are complicated, long, and contain a lot of technical jargon that some policyholders may not understand. If you believe that you are a victim of a bad faith claim, you must contact your lawyer at the earliest to understand how you can proceed to get your claim. Lawyers are insurance experts and can help provide clarification on your case.
Bad Faith Lawsuits
If an insurer is found guilty of bad faith, they can be liable to pay for damages that exceed the limits of the policy. This may include damages for causing emotional distress, punitive damages, statutory penalties, consequential economic losses, interest, and attorney’s fees. Punitive damages are usually determined with regard to the insurer’s wealth and the actual losses of the insured. The punitive damages are usually set really high to discourage the company from repeating the same behavior in the future with others.
The settlement of bad faith claims depends on the reputation of the insurance company, your past record with the company, and the details of your case. The settlement could also be a lot more than what you would have been paid if the claim had been honored.
Insurance companies compromise on their foundation of trust when they act in bad faith. There are various tactics that could constitute bad faith, and the main goal of the court is to make the policyholder whole again by honoring the claim. If you believe your insurance company has committed fraud or acted in bad faith, you must contact an experienced attorney at the earliest to get the help and support you need.