Most people buy insurance to guard against any money losses that may arise due to property damage or injury. Insurance premiums are paid on a monthly basis in exchange for various duties to be carried out by the insurer. This article will discuss when insurance companies act in bad faith.
By paying your monthly premiums the insurance company owes you certain duties. Some of these duties include the following:
- Providing coverage
- Upholding the terms of the policy
- Paying any valid claims covered by the policy
In addition, the insurance company owes the policyholder an implied duty of good faith or dealing fairly with the policyholder.
Bad Faith Conduct
Unfortunately, there are many cases where insurance companies fail to carry out their duties to the policyholder. This can happen by the insurance company deciding to protect its profits rather than provide the duties it owes. Some ways an insurance company may do this include the following:
- Carrying out deceiving practices
- Purposefully misinterpreting its own policy language or records to avoid paying a claim
- Using unreasonable delaying tactics so as to avoid resolving a claim
- Making unnecessary demands with regards to proof of loss
- Being abusive
- Requesting that the policyholder contribute to a settlement when they should not have to do so
- Failing to carry out a thorough investigation
These are a few examples of the ways an insurance company can breach the implied duty of good faith. When this happens, it may lead to a bad faith lawsuit against the insurance company.
Bad faith acts can happen, for example, whereby an insurance company refuses to pay a claim for no good reason. Or they refuse to pay the claim without properly carrying out an investigation. Or doing an investigation but not in a timely manner.
For legal advice and representation in your bad faith lawsuit speak to a Vinson Law Office attorney today.