What is "bad faith" when it comes to insurance? What are common bad faith insurance practices?
The term “bad faith” refers to an insurance provider's attempts to abandon its obligations to its clients. When an insurance company acts in bad faith, you may be able to take legal action against them. At Morgan and Morgan, we have dealt with countless insurance companies for more than three decades. For this reason, we know the tactics they use to deny valid claims.
We understand how disappointing it can be to deal with insurance companies. In fact, when these companies realize that the claimant does not have legal representation, they usually turn into bullies. But no insurance company in the country is too big for our attorneys to take on. As long as you have a valid claim, we will fight for you.
Is Bad Faith Insurance the Same as Breach of Contract?
No. Although they are often used interchangeably, these two terms have different meanings. When an insurance company breaches a contract, it does not necessarily mean it acted out of bad faith. For example, let's say an insurance company refuses to settle a claim because they allege that the particular claim is not included in the contract. In that case, this could be a breach of contract if you can prove them wrong.
In a breach of contract dispute, your attorney can study and interpret your insurance contract to determine whether or not you are covered for that particular loss or damage. Therefore, this is not a bad faith situation because the insurance company is acting based on its own interpretation of the contract.
On the other hand, the insurance company might be guilty of bad faith if they refuse to settle because they want to cut costs or they simply do not have a valid reason. For example, suppose all evidence shows that you are eligible for coverage, but the insurance company still refuses to settle for unclear or no reason at all. This could be a case of bad faith insurance.
What Is the Penalty for Bad Faith Insurance?
The penalty for bad faith insurance will depend on the specifics of your case. Generally, a skilled insurance dispute attorney might be able to help you recover compensatory and punitive damages.
Compensatory damages further fall into two subcategories: economic and non-economic damages.
Economic damages are the kind of damages meant to help you recover the financial losses you suffered due to the injury. For example, if you could not go to work due to your injuries, you could file a loss of wages claim with the insurance company. The same applies if you had to pay for your medical expenses out of pocket because the insurance company would not approve your claim. Other expenses and losses include:
- Transportation to medical appointments
- Cost of medical equipment
- Loss of earning potential
- Future medical expenses
On the other hand, non-economic damages include damages that do not have anything to do with financial losses. Examples include pain and suffering, loss of enjoyment of life, mental anguish, etc.
And if the court determines that the insurance company was extremely careless or negligent, they might award punitive damages. This award, usually more than compensatory damages, is meant to punish the defendant and warn other parties against such practices.
How Can I Tell If My Insurer Is Acting Out of Bad Faith?
If you are unsure whether your insurance provider's conduct amounts to bad faith, here are some common signs of bad faith insurance to watch out for:
- The insurance company refuses to investigate the claim
- The insurance company does not communicate with you about your claim
- The insurance company takes too long to process the claim
- The insurance company offers an unbelievably low settlement offer
- The insurer simply refuses to pay the claim even though it is valid
If you suspect that the insurer is acting out of bad faith, our attorneys might be able to help. All you will need to do is get in touch with us by filling out our free, no-obligation case evaluation. Then, we will review your case and take the most appropriate action.
How Do I Prove That My Insurance Company Acted Out of Bad Faith?
To prove bad faith insurance, your case must satisfy three key elements. Firstly, you must prove that you were eligible for coverage per the insurance policy. This could be either your policy or another party's.
For example, if you got injured in a car accident in an at-fault state, you will file a claim with the other party's insurance provider. If you got injured in a similar accident, but in a no-fault state, your insurance provider should be able to cover your medical expenses under your PIP insurance.
Secondly, you must prove that the insurance company withheld the coverage you were eligible for. This could either be your own insurance provider or the other party's.
Lastly, you should demonstrate that the decision to withhold coverage was unreasonable.
How Can Morgan and Morgan Bad Faith Insurance Lawyers Help?
Bad faith insurance cases are complicated. For instance, there is a thin line between bad faith and breach of contract. And that is not the only thing you should be concerned about. These cases can drain you emotionally, mentally, physically, and even financially.
But with Morgan and Morgan bad faith insurance attorneys by your side, we will fight for you so you won't have to. If you believe the insurer acted in bad faith, fill out our free case evaluation form today.