Insurance Bad Faith Claim Laws
Personal Injury Claims and Insurers
Bad faith claim laws are state laws that allow policy holders to file lawsuits seeking compensation from their insurance companies when the insurance company breaches the implied expectations of good faith and fair dealings. These laws are also known as unfair insurance claims laws.
Bad faith claims come about when an insurance company fails to act reasonably and denies insurance benefits to a policy holder when a legitimate claim is filed.
An injury lawyer may be able to help you understand bad claim laws and your rights if you've suffered a personal injury. Simply fill out the quick case review form below to arrange an initial consultation with an attorney near you.
Duties of the Insurance Company
Insurance companies have a duty to place the interest of their policy holders above the interests of the company. When claims are filed, the insurance company must look for coverage under the policy, rather than reasons to deny the claim.
The insurance company must make all provisions of an insurance policy clear and available to the policy holder. Under bad faith claims laws, when an insurance company decides to deny a claim, they must clearly state the reasons for the denial of benefits as written in the insurance policy.
Insurance companies also have a duty to take action on claims in a reasonable and timely manner.
When an insurance policy is written and premiums are paid, a contract exists between the policy holder and the insurance company. Both parties are required to act in good faith and follow the terms of the contract. When an insurance company purposefully delays or denies a valid claim, they are in violation of the contract and bad faith claims laws.
Bad Faith Claims Lawsuits
If an insurance company acts in bad faith and refuses to pay a legitimate claim for an accident, event or personal injury that should have been covered under the policy, the policy holder may file a personal injury and/or a breach of contract lawsuit to collect damages. These damages may include the money that should have been paid on the claim, legal expenses such as court costs and attorney's fees and other expenses that were incurred as a result of the denial of the claim.
In some cases, bad faith claims victims may also be awarded punitive damages and receive compensation for pain and suffering.
Violation of Bad Faith Claims Laws
Bad faith claims laws require insurance companies to act in good faith and to deal fairly with their policy holders. Insurance companies are not permitted to invent reasons to deny valid claims or search for loopholes to get out of paying legitimate claims. Under bad faith claims laws, insurance companies must look at each claim fairly when deciding whether to pay it.
Most states have insurance departments that monitor insurance companies. These state agencies are in charge of enforcing bad faith claims laws and generally have a department to handle bad faith claims. If the insurance department is not able to settle the dispute, violations of bad faith claims laws are sent to court.
When there is a dispute concerning what is covered by an insurance policy or what various terms actually mean, the court will generally interpret any ambiguous or confusing language in the contract in favor of the insured to provide coverage. In cases where a word, phrase or clause in the contract excludes coverage, the court will usually give this exclusion a narrow or restrictive meaning, so that it will be read to exclude as little coverage as possible.
Claim Denied? Get Help
If an insurance company has delayed, denied or failed to investigate a valid claim, you may have the basis for a bad faith claims lawsuit. Because state laws vary, speak with a local personal injury lawyer to find out exactly where you stand. At Total Injury, it is simple to set up a free case evaluation with a lawyer in your area. Simply call us at 877-288-7564 or fill out our free case evaluation form and we will connect you with a local lawyer right away.