Insurers can sometimes misrepresent policyholders and leave them without coverage – this is called bad faith insurance.
Bad faith insurance is a term for the tactics some insurance companies use to avoid their contractual obligations to their clients. These tactics can be applied to any insurance policy, from homeowners to health insurance and life insurance policies.
When you sign up for an insurance policy, there is a long list of terms and conditions that lay out how much the company will cover, what you pay in premiums, and how to make a claim with the insurance company. There's usually also a section that details the insurer's obligations to fulfill their end of the deal.
If the insurer violates a contract term or otherwise ignores their responsibilities, they could be acting in bad faith. It's important to note that intention is the key to a bad faith claim. If the company made an error or there was a delay in sharing information, you may not have a case.
Bad Faith vs. Good Faith Examples
You sign a contract for a health insurance policy, and one of the terms says that the company will cover 20% of any inpatient surgery. A few months later, you rush to the hospital because of appendicitis and need emergency surgery, but the insurance company only pays 3% and refuses to cover additional costs.
You get into a car accident and call the insurance company. You can connect with an employee, but they say that the adjuster will be in contact about the loss amount, but after several months you don't hear anything. The insurance company never addresses the accident, and you're unable to file a claim.
The insurance adjuster comes to check out your house after a fire in the kitchen. They note the damage and take pictures, but when you receive the coverage amount, it's less than what you expected. Upon further investigation, it turns out that the adjuster made an error when evaluating the claim, and the remaining amount is covered.
After calling the insurance company about a fender bender, you hear back from the adjuster the same day, and they cover the amount agreed in the contract.
Making a Bad Faith Claim
Most states have laws against unfair claims practices. In most cases, you'll need to provide evidence that the insurer either violated or ignored the terms of the contract to avoid fulfilling their obligations.
In some cases, the law requires insurance companies acting 90in bad faith to pay damages to compensate the victim above the promised amount under the original agreement. This is intended to cover any out-of-pocket expenses the policyholder may have paid because of the insurer's negligence. In cases where the insurance company is extremely negligent, the policyholder may take the case to court and receive punitive damages.
Contact an attorney if you intend to file a case against your insurance company for bad faith insurance. Never attempt to fight a legal battle without a lawyer.
Don't Settle for Bad Faith Insurers
If you believe the insurance company has acted in bad faith, contact Territorial Law. Our legal team has been dedicated to protecting victims of bad faith insurance since 1987. We have helped countless clients pursue the compensation they deserve, and we can help you too.
Contact Territorial Law today!