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Defining Insurance Bad Faith

On Behalf of | Mar 24, 2014 | Articles

Insurance bad faith means the unfair or disrespectful behavior of an insurance company when they turn away from an insurance claim that they should clearly pay. In addition to not paying you what you deserve, an insurance company’s unprofessional delay in issuing you the proper amount or only distributing a smaller payment may actually fall under the bad faith guidelines.

Some insurance companies choose to violate this bad faith jurisdiction because they want to save financial resources by ignoring claims that should not be ignored or denied simply for the reason that they do not believe they will ever be taken to court because of this decision. By denying claims that are legitimate, insurance companies can increase their bottom line. Insurance companies know that many who are insured just give up after their claim is rejected a couple of times, sometimes even after it is rejected just once.

Example of Insurance Bad Faith

A person’s home was damaged due to fire, and they filed a claim with their insurance company for the loss. Rather than paying the person for the loss so they could start fixing their home and move on with their life, this insurance department rejects the claim or cuts a check for the customer honoring only a portion of the loss even though the entire claim is appropriate and payable. This type of insurance claim is commonly referred to as a “first party” claim because the claim was brought by the person who was insured.

Your Options if You are Confronted with Insurance Bad Faith

You can walk away from it and enable the insurance company to deny your claim, which is exactly what the insurance company is hoping you do. Or, you could hire a lawyer and legally call them out on their decision. The correct attorney will know exactly what avenue to take to fight this insurance firm on the basis of this unrighteous claim denial.

There is a 2-year limit on filing a lawsuit against an insurance company for bad faith. This means you need to file a lawsuit within 2 years from the time the insurance company committed this immoral and wrongful conduct. If you don’t bring a lawsuit within this 2 year period, you will never be able to bring a bad faith claim against the insurance company for this case. This is called a statute of limitations.

Outcome of a Successful Bad Faith Case

If you happen to secure a clear victory in this bad faith case against your insurance company in court, you are likely to recover all your damages, including the amount of money due under your insurance policy. On top of this, the court may even hit the insurance company a little harder and you may receive some money that you were not entitled too to begin with in terms of the policy amount. So basically you could wind up being sent more money than what your policy was worth in this case if the court determines that this insurance company’s choice made life that much more difficult for you. The court may even award you with punitive damages if the insurance company’s bad faith conduct was especially egregious, reckless, willful, or wanton.

Challenging the Insurance Company’s Decision

It is deplorable when insurance companies break their promises to clients that chose them when they could have chosen another insurance company instead. There are many ways that an insurance company can act in bad faith, and the best way is to educate yourself on the different types of ways an insurance company can engage in this sort of practice. If you or someone you care for ever finds themselves in this terrible position, financial or otherwise, your insurance company has the duty and obligation to honor your claim and discharge to you the appropriate monetary figure.

If an insurance company ever balks when one of its customers is in a rough spot and deserves financial consideration, it is likely acting solely in its self-interest and this is when you need to pick up the phone and call the attorneys of Makarem & Associates.
Makarem & Associates is dedicated to helping our clients who have been victimized by unfair insurance companies. Call us today at 800-610-9646 or send us your inquiry below to discuss your claim.