Insurance Bad Faith Law

Insurance companies under the law have a duty of acting in good faith and dealing fairly with policy holders.

But to maintain their profits, insurance companies traditionally pay the least amount they can in honoring claims under its contract with their insured. They also find ways to deny claims and cancel policy holders that file claims.

Bad Faith Defined

However, some insurance companies cross the line and act in bad faith. Bad faith is, generally, fraudulent deception in investigating claims, refusing to honor its contract with their insured in an intentional or malicious manner, and evading responsibility for its actions.

For example, an insurance company that issued a fire insurance policy on a building, in denying the claim after the building burned down, inspected the damage but failed to investigate the cause of the fire and instead accused its policy holder of arson without any basis in fact.

Your Legal Recourse

If you believe your insurance company acted in bad faith regarding a claim you filed, you may bring a lawsuit for breach of contract or on a tort basis. A tort is a wrongful act or infringement upon a right that can result in civil liability.

The lawsuit can claim damages. In these cases, you also may be able to recover an amount that is larger than the face value of the insurance policy. You may have grounds for punitive damages. These are damages to punish the insurance company for its action. Punitive damages can be significant to dissuade others from acting in bad faith. You also may claim the cost of attorney fees and be reimbursed for them.

Hiring an Attorney

As you may suspect, suing an insurance company can be a costly and lengthy process. The facts needed to prove your case can be difficult to obtain. That’s why you need an attorney who is well-versed in suing insurance companies. Van Norman Law is experienced in successfully suing insurance companies. It is in your best interest to arrange a free initial consultation to learn if you have a viable case.