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Insurance Companies and Bad Faith: Do I Have a Case?

When tragedy strikes, the last thing you want to worry about is battling the insurance company. You expect that when you file a claim, your insurance agency will swiftly and expertly handle it in a timely manner with your best interests in mind. In fact, that is what agencies are legally obligated to do. This is called the “implied covenant of good faith and fair dealing,” and it exists in virtually every insurance contract.

If an insurance company puts its own interests before those of the insured, there is a course for legal action. When the agency fails to act on behalf of the insured in a good and fair manner, such as denying a claim on questionable grounds, this is called “acting in bad faith.” There are two kinds of bad faith: first-party and third-party.

First-Party Bad Faith Claims

Many first-party cases of bad faith occur within the home and automobile insurance categories. They usually involve the insurer performing an improper investigation and valuation of damaged property, or even refusing to investigate at all. Bad faith also applies to undue delay in handling claims, refusing to defend a lawsuit, or threats against the insured. Other instances include refusing a timely and equitable settlement despite clear liability, or hiding behind litigation. Urging a claimant not to retain legal counsel is another common reason behind bad faith claims. A final example, though more rare, is denying health or life insurance coverage for personal injury.

Third-Party Bad Faith Claims

When a liability claim is issued against the insured, the insurance agency is obligated to settle the claim within the insured person’s liability policy limits. If the insurer does not pay a judgment or settlement of a covered lawsuit, causing the insured to be sued, this is grounds for a bad faith claim. The insurance company could be liable for any damages incurred by the policyholder which exceed the policy limits if it does not act in good faith.

Unreasonable interpretations of an insurance policy are also classified as acting in bad faith. An agency may expand or contract the meaning of certain state provisions, such as the process of assessing damages, in order to refuse the claim, causing the insured to be sued.

How do I protect myself?

When filing a claim with an insurance company, the claimant should take special care to document all communications and dealings with the agency. To determine bad faith, first, the insured must prove that the insurer’s conduct was unreasonable. Second, the insured must prove that the insurer intentionally denied a claim or intentionally delayed paying a claim while knowing it to be valid.

Hiring an attorney experienced in taking on insurance companies will allow you to better handle the difficulties of navigating your claim, and win your just compensation. For more information, contact the Law Office of D. Hardison Wood today.

This entry was posted in Motor Vehicle Accidents, Personal Injury.