Your insurance policy is a contract between you and your insurance company, where the insurance company promises to pay certain covered costs so long as you pay your premiums. Insurance companies are required to operate in good faith.
Unfortunately, an insurance company can refuse to pay a valid claim, fail to investigate your claim in a timely manner, delay payment, or offer you far less than you should be paid under the policy terms you both agreed upon. In cases such as this, if you want to hold the insurance company accountable and have them pay your claim in full, you may need to take legal action against the insurance carrier.
How does an Insurance Bad Faith Case work?
Step 1 = Conduct a full review of the terms of your contract.
When you purchased the insurance, you likely did not read the fine-print. However, if you believe yourself to be the victim of insurance bad faith, those terms can be reviewed to determine the best way to bring a legal action against the insurance company.
Step 2 = A formal letter is sent to the insurance company, effectively giving them notice of the bad faith claim.
This letter informs the insurance company that: (1) you are represented by an attorney; (2) failing to abide by the insurance contract will result in a lawsuit; (3) lists the amount claimed; and (4) gives a specific time limit within which compliance with the insurance contract is expected.
If the insurance company fails to respond in the allotted timeframe, a lawsuit may be filed.
Types of Insurance Bad Faith Cases
There are a variety of actions that an insurance company could take that would violate the terms of your policy, including:
Ignoring a claim
Delaying payment
Underpaying a claim
Denying a valid claim
Unfair or deceptive practices
Undervaluing claims
Fraud
Misrepresentation
Making unreasonable demands
If the insurance company is found to have acted in bad faith, they may be required to pay you all of your claim, along with other damages and your legal fees.
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