Insurance Bad Faith
What is Insurance Bad Faith?
Insurance companies are required to act in good faith when processing claims and making decisions regarding a policyholder’s rights under a policy. When an insurer acts unreasonably or for an improper motive, it can be held liable for acting in bad faith and required to pay compensation for the damages it has caused.
It is no secret that insurance companies are in business to make money, and that any money they pay out in benefits can affect their profits. Regardless, however, insurance companies are legally obligated to abide by the terms of their policies, which includes paying benefits on covered claims when they are properly submitted. Putting profits ahead of people is an improper motive, and while insurers are entitled to investigate claims and make sure their procedures are followed, doing so for the purpose of finding a way to avoid paying valid claims is bad faith.
All of the following tactics may be examples of insurance bad faith:
- Refusing to pay benefits/Denying coverage
- Paying only partial benefits
- Offering an unreasonably low or “lowball” amount
- Undue delay in processing a claim
- Canceling or rescinding a policy to avoid payment
Insurers also have duties to their policyholders when claims are made against the insured by third parties, such as when an insured is sued for causing an automobile accident or other personal injury situation. Insurance companies can be liable for acting in bad faith regarding third-party claims as well.
All Damages Allowed for Insurance Bad Faith
Even though an insurance policy is a type of contract, violating the covenant of good faith is a type of civil tort, meaning that you can recover for all of the damages caused by the insurance company’s actions, including economic loss, pain and suffering and emotional distress, and even attorney’s fees and punitive damages, where applicable.
If you feel your insurance company is not dealing fairly with you regarding your claim, contact Leandros A. Vrionedes, P.C. for a free consultation with an experienced New York City attorney regarding whether the insurance company is acting in bad faith and what can be done do about it.