Bad Faith Insurance Claims: When Your Insurer Won't Pay

Insurance companies have a legal obligation to handle claims fairly and in good faith. When an insurer unreasonably denies, delays, or undervalues a legitimate claim, they may be acting in bad faith, which can entitle you to additional compensation beyond your original claim.

What Is Insurance Bad Faith?

Bad faith occurs when an insurance company fails to fulfill its contractual obligations to its policyholders or claimants. This can include unreasonably denying a valid claim, failing to investigate a claim properly, unreasonably delaying payment, offering far less than the claim is worth, failing to communicate with the claimant, and misrepresenting policy provisions.

Types of Bad Faith

First-party bad faith occurs when your own insurance company acts in bad faith on your claim. Third-party bad faith occurs when the at-fault party's insurance company acts in bad faith in handling your claim.

Additional Compensation

If you can prove bad faith, you may be entitled to the full value of your original claim, consequential damages caused by the bad faith, emotional distress damages, attorney fees and costs, and punitive damages in egregious cases.

How to Prove Bad Faith

Document all communication with the insurance company. Keep records of delays and unreturned calls. Save all correspondence including denial letters. Note any misrepresentations made by the adjuster.

Conclusion

Insurance bad faith is a serious violation that can significantly increase your total recovery. If you believe your insurer is acting in bad faith, consult with an attorney.

Use our free settlement calculator to estimate what your case might be worth.