Your insurance policy is a contract that works like this: in exchange for you, the policyholder, paying premiums to the insurance company, the company must provide coverage and pay you for valid claims as detailed in your policy.
You file insurance claims as either a first-party or third-party claim. First-party claims are when you seek to have your insurance company pay on a valid claim under your own policy.
Third-party claims are when you seek compensation from someone else’s insurance company based on the terms of their policy.
An example of a third-party claim would be if you were in a car accident and it was the other driver’s fault.
However, insurance companies are businesses. They want to hold on to as much of their profits as possible. This means that it is in the company’s interests to deny claims or pay out the absolute minimum on valid claims.
In some instances, doing so can lead to a bad faith insurance claim.
What Is Bad Faith Insurance?
Bad faith insurance refers to an insurance company’s attempts to renege on its obligations to a policyholder.
Insurance companies must take steps to ensure that the claims they pay are valid. However, sometimes they go too far or act unreasonably.
The California insurance bad faith law defines some examples of what constitutes bad faith:
- Denying coverage for a valid claim;
- Paying only partial benefits;
- Refusing to settle with a third party;
- Failing to fully investigate a claim;
- Failing to act promptly to process or respond to a claim;
- Canceling a policy to avoid paying a valid claim;
- Misleading claimants as to policy provisions or legal deadlines; and
- Offering an unreasonably low settlement amount.
When an insurance company acts in bad faith, it can and should be held liable for any damages its actions cause. Bad faith insurance claims can be either first-party or third-party.
Proving Bad Faith
Not every poor decision by an insurance company stems from bad faith. An insurer can wrongly deny a claim but be acting in good faith.
Whether or not a company’s actions constitute a bad faith insurance claim depends on the company’s motives. Recently, the California Court of Appeal held that in proving bad faith, you must show that the company behaved unreasonably in some way.
Even if not bad faith, however, the insurance company might still be breaching your contract if it denies a valid claim.
In that case, you should still be able to recover the benefits you are entitled to as well as compensation for any damages you suffered because of the company’s actions.
Remedies for a Bad Faith Insurance Claim
As a policyholder, you have a number of options if your insurer committed bad faith:
- Breach of contract—You can recover the benefits that were due to you as per your insurance policy, plus interest;
- Bad faith damages—In your claim for damages, you can include compensation for consequential economic losses, emotional distress, and attorneys’ fees; and
- Punitive damages—You can request these exemplary damages if you can show your insurer acted with fraud, oppression, or malice.
Your attorney will investigate the facts of your claim and help you determine the value of your bad faith insurance claim.
Contact Wells Call Injury Lawyers for Help with Your Bad Faith Insurance Claim
If you believe you have a bad faith insurance claim, you should speak to an attorney as soon as possible.
Insurance companies have teams of legal staff ready to defend them, and you are at a disadvantage trying to deal with these companies without your own lawyer on your side.
Wells Call Injury Lawyers have the experience necessary to defend your rights and get you the compensation you deserve.
Contact us to schedule your consultation for your bad faith insurance claim.