Most of us pay insurance premiums with the peace of mind that, in the event of a covered loss, our insurer will be there to financially support us. But what happens when the company you rely on to protect you throws unexpected roadblocks in your path? In such situations, you might have a case for a bad faith insurance claim.
Bad faith occurs when an insurance company fails to fulfill its contractual duty to act in good faith and fair dealing with its policyholders. This doesn’t mean simple mistakes or misunderstandings. It refers to intentional or reckless actions on the insurer’s part that unreasonably delay or deny a valid claim.
Here are some red flags that might indicate your insurer is acting in bad faith:
- Unreasonable delays — Insurance companies are obligated to investigate claims promptly and provide a timely decision. Unexplained delays in processing your claim, particularly after submitting all requested documentation, could be a sign of bad faith.
- Denial of valid claims — If your claim clearly falls within the coverage outlined in your policy, and the insurer denies it without a proper explanation, it might be bad faith. This includes situations where the insurer misinterprets policy language in an unreasonable way to avoid payment.
- Lowball settlement offers — An insurer offering a settlement amount that’s significantly lower than the actual value of your covered loss, especially without proper justification, could be acting in bad faith.
- Failure to investigate — A thorough investigation should be made before denying a claim. If the insurer seems uninterested in gathering evidence or interviewing witnesses, it might be a sign of bad faith.
- Harassment and coercion — Tactics designed to pressure you into accepting a lowball offer or withdrawing your claim altogether, such as threatening to cancel your policy, could constitute bad faith.
If you believe your insurer has acted in bad faith, you have legal options. Here are some potential remedies you might pursue:
- Payment of the original claim — The primary goal is often to receive the compensation you’re rightfully owed under your policy.
- Additional damages — Depending on the severity of the bad faith actions, you might be entitled to recover additional damages, such as interest on overdue payments, legal fees incurred while fighting the denial, and even emotional distress caused by the insurer’s behavior.
- Punitive damages — In egregious cases where the insurer’s actions were particularly malicious or intended to defraud you, the court may award punitive damages to punish the insurer and deter similar behavior in the future.
If you suspect that your insurance claim was wrongfully denied, or that your insurer has illegally manipulated your policy or your claim, an experienced business litigation attorney can answer your questions so that you fully understand your legal situation and how you should proceed.
H. Clay Parker, Esq. represents Florida companies in all types of business litigation matters, including contract and insurance disputes. Please call 407-216-2504 or contact us online to schedule an appointment at our Orlando office.
