ELEMENTS OF AN INSURANCE BAD FAITH CLAIM
On behalf of Girard Bengali, APC posted on Thursday, March 14, 2019.
Insurance companies have an obligation to their clients, whether it is to pay the insurance holder’s legitimate claim or to investigate and process a claim within a reasonable time period. This is because they often have more resources than the policyholder-they have more financial resources, greater negotiating power and more expertise. These same factors also put the company in the driving seat, which is why courts often find that companies should proceed with an obligation of good faith and fair dealing.
A company could be acting in bad faith if they misrepresent the contractual language to the policyholder to avoid a payout. Acting in bad faith could also involve making unreasonable demands to prove a cost or failing to disclose important policy limitations and exclusions. These are only some of the examples of bad faith, but the bottom line is that insurance bad faith can end up negatively impacting a client’s claim.
It might be possible to hold an insurance company liable for their bad faith but there are certain requirements that must be met. The policyholder generally must show that benefits that were due were withheld by demonstrating that there was a valid claim under the policy. In addition to this, it must also be shown that the reason for withholding those benefits was unreasonable.
State law also exists on the matter and varies from location to location. If someone feels they have been the victim of insurance bad faith, they might have legal options available to them. Though it might feel overwhelming going against a big company, an experienced attorney can discuss the options and the way forward.
