Insurance companies are designed to protect their policyholders financially when their clients need them most. There is a paid-for promise and contractual agreement that the insurance provider will work with and compensate a client for the claims covered in their insurance policies. Unfortunately, some insurance companies practice bad faith insurance ethics that result in financial strains on the clients that are not receiving the proper compensation.
Bad faith insurance law exists to protect consumers from unethical insurance practices. Insurance bad faith occurs when the insurance provider deliberately deceives or refuses to perform a contractual obligation to the appropriate policyholder. Most United States jurisdictions protect policy holders from bad faith insurance through implied covenant of good faith and fair dealing.
According to the website of Smith Kendall PLLC, bad faith insurance may arise during coverage disputes, deceptive trade practice violations, and insurance code violations. For example, an insurance adjuster may be negotiating in bad faith if insisting their policyholder’s claim is worth significantly less or offers a low settlement offer with specific reasons for the lower status. Bad faith may also arise if the company engages in fraud or blatant lies that impede the policyholder’s ability to pursue the claim.
When an insurance company breaches their contract, a tort claim may be filed with the breach of contract claim in order of the policyholder to receive the necessary compensation. In cases that are brought to trial, a settlement greater than the original policy claim is often reached to return damages caused to the client.
If you believe you are a victim of bad faith insurance, consult an insurance attorney in your state to discuss your legal options and receive compensation for the financial strain you have suffered.