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What Is Insurance Bad Faith?

Posted in Insurance law on February 9, 2021

Anytime an insurance company wrongfully denies a claim, they are acting in bad faith. The insurance policy between the insurance company and the insured is considered a contract that requires the company to act in good faith. Insurance companies often try to deny a claim for any reason they can or underpay for a claim. Bad faith needs to be proven by the insured by showing how the insurer failed to honor their policy.

Elements of Bad Faith

Insurance companies have a contractual obligation to handle claims in good faith. Yet insurers may deny, delay, or ignore valid claims. Results-oriented legal representation could force your insurer to pay up.

You may have a bad faith insurance case if:

  • Delayed payment. If a company ignores your claim, requests unnecessary documentation, or excessively delays your case instead of paying promptly, it may be bad faith.
  • Failure to fairly investigate the claim. Denying your claim without properly investigating it or assessing damages and liability is an indication of bad faith.
  • Misrepresentation of policy terms. It is illegal to misrepresent the terms of a policy negligently or intentionally, such as through excessive exclusions or ambiguous language.
  • Underpayment of claims. Offering a fast but low settlement is a common tactic to save an insurance company money. Do not accept an offer until first consulting an attorney.
  • Wrongful claim denial. Insurance companies have a reputation for denying claims for any possible reason. Many claim denials depend on illegal exclusions or the company’s vague interpretation of a technicality buried in fine print.

How to Know If You Have a Legitimate Insurance Bad Faith Claim

In most cases, claim denials are not a result of bad faith. There are valid circumstances where your policy may simply not cover the type of damage you suffered. However, if your claim was denied, it is a good idea to thoroughly review your insurance policy. Insurance policies are long, complicated documents with lots of types of damages that aren’t covered. These contracts are meant to be complicated because it helps minimize claims that the insurance company must honor. Complicated policies with lots of exceptions also help protect insurance companies from situations where they may be vulnerable to a lawsuit.

Settlements in Bad Faith Insurance Lawsuits

Do not walk away from a valid insurance claim without a fight. Bad faith can significantly impact your ability to recover benefits the company owes you under your policy. If you believe an insurance company is breaching its legal duties of care to you, contact an attorney to discuss a claim against the insurer for acting in bad faith.

The attorneys at Manchin Injury Law will explain your legal options and work to obtain the compensation you need and deserve after an insurance company has acted in bad faith. Talk to our Clarksburg lawyers about your bad faith case today by contacting us online or by calling us at 800-557-4LAW.

Keep in mind that we take personal injury cases on a contingency fee basis — you pay no legal fees unless we succeed.