Life and property insurance providers have a duty to promptly investigate your claim, typically within 30-60 days of filing for life insurance or property insurance. Many insurers may try to dissuade you from seeking legal representation by unreasonably delaying your life, homeowners, renters, or property insurance claim, offering a lower settlement amount, or employing other tactics to avoid paying the full claim. If your life or property insurance claim has been unjustifiably delayed or denied, it is advisable to consult a lawyer specializing in life and property insurance. Your attorney can assess whether you have grounds to sue for breach of contract and/or bad faith.
As parties to a contract, life and property insurance companies are obligated to act in good faith toward the policyholder and their beneficiaries. Acts of bad faith by insurers may include intentionally, knowingly, recklessly, or unlawfully delaying or denying an insurance claim for self-serving reasons. This can involve a deliberate failure to conduct a thorough investigation of a life insurance or property insurance claim, refusing to communicate with the insured or beneficiary, engaging in harassment, or any other objectionable behavior aimed at avoiding payment of policy proceeds. If an insurance company has engaged in bad faith practices during the handling of your life or property insurance claim, you may have the right to seek punitive damages and have your attorney fees covered.
Insurance bad faith is a complex area of the law and in our state, it’s constantly changing. But here’s how it basically works; let’s say you’re involved in a car accident with another driver who has a $10,000 insurance policy. You suffer injuries such as a broken leg and arm, and when you approach the other driver’s insurance company requesting the $10,000 for your medical expenses, they refuse to pay. As a result, you decide to take legal action against the driver and obtain a judgment for an amount higher than $10,000.
In such a situation, that insurance company may be held responsible for not only paying the initial $10,000 they should have paid, but also covering all your subsequent damages. This is known as insurance bad faith.
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