Bad Faith and Unfair Claims Handling

An insurance policy is essentially a contract between the policyholder and the insurance carrier. When you submit a claim to your insurance company, the insurer is required to perform a thorough investigation, and if the claim is legitimate, award you benefits promptly. When an insurance company fails to act in a fair and honest manner towards its policy holders, insurance bad faith is said to have occurred. If the insurance company refuses to pay or unreasonably delays paying your legitimate claim, you may have the right to pursue an insurance bad faith lawsuit.

Bad faith can occur in conjunction with any type of insurance, including auto insurance, life insurance, and homeowner's insurance. To prove bad faith, you must establish two facts:

1. The insurance company failed to honor the policy.
2. The insurance company had no reasonable cause not to pay what was due.

There are many ways that an insurance company can commit bad faith, including:

Failing to promptly and thoroughly investigate a claim
Withholding benefits without cause
Unreasonably delaying payment
Unreasonably denying benefits to a claim
Underpaying or undervaluing claims
Using unreasonable interpretations in translating policy language
Unfairly refusing to settle and/or reimburse claims
Unfair cancellation of insurance policy

Unfair claims handling is another issue that can affect a policyholder's ability to receive the benefits to which he or she is entitled. Unfair claims handling occurs when insurance companies try to avoid paying valid claims or reduce the payment to the policyholder. Unfair claims handling involves the conscious doing of some wrong on the part of the insurance company. This can include:

Fraud
Misleading or deceiving a policyholder
Neglect or refusal to fulfill a duty or contractual obligation

An insurance dispute lawyer from Morgan & Morgan can help you determine if your insurance company is engaging in bad faith practices or unfair claims handling. We will ensure that your rights are protected and fight for justice on your behalf. Contact us today for a free, no obligation case evaluation.