What does bad faith insurance mean? When an insurance company tries to slip by on its legal obligation through a contract or they refuse to pay within a reasonable period, the insurance company has acted in bad faith. Basically, they misrepresent their contract to get out of paying. You have a variety of ways that an insurance company might act in bad faith, such as:
- Misrepresenting of contract terms
- Exclusions to avoid paying
- Unreasonable demands to cover a loss
- Failure to disclose policy limitations
Important to note, simple mistakes don’t mean that bad faith has taken place. Because of bad faith insurance practices, some states have enacted laws to protect consumers from these predatorial practices. When it comes to bad faith insurance practices, it could work in a variety of industries like health insurance, homeowner’s insurance, auto insurance or life insurance. Anything that had a contract where someone could reasonably expect coverage and didn’t receive it could be considered bad faith insurance practices.
What Constitutes Bad Faith Insurance Practices?
As we stated before, making a simple mistake doesn’t constitute bad faith. What is categorized as bad faith insurance practices are when denied or ignored the evidence for a claim that supports the basis of the policyholder. They only look for what will support their claim for denial. This constitutes bad faith, and laws against this exist to keep insurance companies honest. If you or someone you love has experienced bad faith insurance practices, you should speak with our law firm today.
How To Fight Bad Faith Insurance
Specific state laws address issues with bad faith insurance. Law also defines this as unfair claims practices, and they exist to protect consumers from poor ethics and malicious behavior on the part of insurance companies. In many cases, when insurance companies act in bad faith, they will have to pay the basic damages to compensate the victim. In fact, they will have to go above and beyond even the claim owed.
Based on Kansas law, the victim can’t file a lawsuit against the insurance company because of how state law doesn’t recognize this as a tort for first parties. Still, Kansas does recognize it in the context of third-party scenarios. Instead, you will often bring a lawsuit against the carrier who breached the contract. Even in Kansas, they still recognize actions for good faith and fair dealing. When you speak with us, we often use the point that the insurance company breached a point within the contract to help defend your rights.
In cases where an insurance company acted particularly maliciously, they may even award punitive damages. This ensures that other insurance companies will feel it is less attractive to act in bad faith. In addition, it discourages the insurance company to act in bad faith with its other policyholders. When a company acts this way toward you, you have to look at it as doing your civic duty to hold companies like this responsible for their actions because it protects others as well. They need to learn that they can’t simply step on people without suffering the consequences.
Example of Bad Faith Practices
Let’s say that your home burned down because of an accident that took place on the property. The policy will cover the loss, but the company denies the claim, and they refuse to do a proper investigation in a timely fashion. If the insurance company said that they will respond soon, but they fail to meet up on your correspondence, this most likely classifies as a bad faith insurance practice. Again, however, this depends on the jurisdiction that you reside in, and you should speak with our law firm to get further information.
The Risks and Rewards of Bad Faith Insurance Lawsuits
Just because you have filed a lawsuit against the company doesn’t mean that you will get punitive damages against the company. This depends on the jurisdiction and the circumstances surrounding the case. While one jury might think emotional suffering worth $10,000, another might believe it to be worth $100,000, which has made these cases difficult because of the wide variation of the cases. You can’t necessarily say what you will get rewarded in any case. Your insurance company will have multiple chances to narrow down the case and eliminate it completely even. For example, the insurer might argue that you didn’t file correctly, or they might have a good lawyer who finds ways around the summary judgment.
Your best bet is to have us look at the case because that is how we can determine how to proceed. If you or a loved one has suffered because of a malicious insurance company, you have a right to bring them to justice. Call us today. We offer a free consultation.