The following is a brief explanation of bad faith; if you believe you have a bad faith claim, consult an attorney for additional information.
When you pay for an insurance policy, you are entering in to a contract with the insurance company: you pay your premiums, and they protect you and your property from loss or damage. In this contract, there is an implied agreement of “good faith,” meaning that the parties agree to act fairly, honestly, and to not take any actions that could take away the benefits of the contract.
Insurance companies have a duty to policyholders to act in good faith: they are supposed to consider your best interest before – or at least as much as – their own interest.
When you make a claim on your insurance policy, your insurance company must:
“Bad faith” means that the insurance company is failing to meet at least one of their contractual commitments. Misrepresenting the amount of coverage, purposefully making inadequate offers of settlement, or unreasonable denials of claims may all be considered acting in bad faith.
Sometimes an insurer just refuses to pay a claim with the hope that you will not fight the decision. Why? Because it is in their best interest to limit the amount of compensation they pay out to their customers. That is how insurance companies have garnered record profits – see Delay, Deny & Defend – while injured people struggle to get their medical bills paid.
There are limited time periods, called statutes of limitations, in which an injured person can file a lawsuit for a personal injury claim. If an insurance company stalls or delays your claim beyond this time limit, that company could be acting in bad faith. In some cases, injured people or their families have to contact an attorney or file a lawsuit to fight the insurance company.
If you have had problems getting the benefits you are entitled to from the insurance company, contact an attorney to evaluate your policy and determine if the insurance company is acting in bad faith.