David Morey 
Insurance companies are both legally and ethically bound to deal with claims in good faith. Unfortunately, this does not always happen.
Bad faith claims occur when an insurance company acts unreasonably or unfairly towards a policyholder by denying a valid claim, underpaying, or engaging in other devious tactics. Knowing the signs of bad faith insurance and how to act accordingly will help protect the rights of the policyholder.
If your insurance company is acting in bad faith, it’s very important to find an insurance bad faith lawyer. They can talk to you about the case, explaining the best way of pursuing it so that you receive all the compensation to which you are entitled. They can hold the insurance firm liable and represent your interests.
Key Elements of a Bad Faith Insurance Claim
Two elements must be proved for an insurance claim to be considered as one of bad faith. These include:
- Policy Benefits Were Withheld: The first element to prove is that the insurance company withheld the benefits from the policyholder. It is also important to prove that the benefits denied to the policyholder were mentioned under the policy terms. To make a successful bad faith insurance claim, the policyholder must collect all the documents that say the claim was denied.
- The Reason Offered Was Unreasonable: Sometimes benefits are denied for reasons like incorrect information or seeking losses outside of policy terms. Most often, insurance claims are denied to annoy the policyholder or for silly or unfair reasons. If that’s the case, the policyholder has valid grounds for an insurance bad faith claim.
Examples of Common Bad Faith Insurance Practices
Some examples of bad faith insurance practices are given below.
- Unjustified Refusal to Pay Claims: When an insurer decides not to pay a claim for reasons not clearly, sufficiently, or rightfully stated, or based on groundless reasons, that can be considered bad faith.
- Unjustified Delays: Excessive delay in processing a claim, not substantiated with reasonable grounds, is a serious act that constitutes bad faith. Insurers prolong the payment to make their policyholder agree to much lower sums than their claims.
- Failure to Conduct a Proper Investigation: An insurer is obligated to investigate claims properly, especially in complex cases. Failure to do so—such as not considering all relevant evidence or not conducting interviews—may lead to a bad faith claim.
- Unfair Settlements: Offering less than the actual value of a claim, or attempting to settle for an amount that is below what the policyholder deserves, can be considered bad faith, especially if there is no clear reason for the low settlement offer.
What You Can Do If You Suspect Bad Faith
If you feel that your insurance company has acted in bad faith, several options are open to you:
- Document everything: Everything, from a phone call to an email or a letter, will be important in proving your case against the insurance company for bad faith.
- Review your policy: It is important to know the terms and conditions of your policy, which will help you determine whether the action taken by the insurer is against your agreement.
- File a Complaint with Your State’s Insurance Department: If you feel that your insurance company is acting in bad faith, you can file a formal complaint with your state’s insurance regulator. These agencies can investigate your claim and, in some cases, penalize the insurer for unfair practices.
- Consult a Lawyer: It’s crucial to consult with an experienced bad faith insurance lawyer. An insurance lawyer will be able to guide you through the process, protect your rights, and pursue litigation against the insurance company if need be. A lawsuit will compel the insurer to pay what is owed and may result in additional damages for emotional distress.
