Bad faith insurance refers to a situation where an insurance company acts dishonestly or unfairly towards its policyholders when handling their claims. In such cases, the insurance company may unreasonably deny or delay a valid claim, fail to thoroughly investigate the claim, or offer a settlement far below the loss’s actual value. 

Bad faith insurance practices can leave policyholders in a vulnerable position, struggling to receive the coverage and benefits they are entitled to under their insurance policies.

What constitutes bad faith insurance claim?

Examples of bad faith insurance practices may include:

  • Unreasonable Denial of Claims: Denying a valid claim without proper justification or investigation.
  • Deliberate Delay: Unreasonably prolonging the claims process without a valid reason.
  • Underpayment: Offering a settlement amount significantly lower than what the claim is worth.
  • Ignoring Communication: Failing to respond to policyholders’ inquiries or requests for information.
  • Misrepresenting Policy Terms: Providing false or misleading information about the policy’s coverage.
  • Refusing to Settle: Unreasonably refusing to negotiate or settle a claim, even when liability is clear or the policyholder’s damages are well-documented.
  • Violating State Regulations: Failing to comply with the applicable insurance laws and regulations in the jurisdiction where the policy was issued.

When an insurance company engages in bad faith practices, policyholders may have the right to take legal action to seek appropriate compensation for their losses and damages. Laws governing bad faith insurance practices vary by jurisdiction, and policyholders need to consult with an experienced insurance bad faith attorney who understands their rights and options in such situations.

What is bad faith insurance claim?

A bad faith insurance claim refers to a legal complaint or lawsuit brought by an insured individual against their insurance company for alleged bad faith practices. In this context, “bad faith” refers to the insurance company’s failure to fulfill its obligations and duties to the policyholder under the insurance contract terms. When an insurance company acts in bad faith, they have not handled the policyholder’s claim fairly, honestly, and timely.

How to sue an insurance company for bad faith?

Suing an insurance company for bad faith is a complex legal process that requires careful preparation and consideration. Some general steps to take if you believe you have a valid bad-faith insurance claim are:

  • Gather Documentation: Collect all relevant documents related to your insurance policy, the claim, and any communications with the insurance company. 
  • Understand Bad Faith Laws: Familiarize yourself with your jurisdiction’s bad faith insurance laws. 
  • Consult with an Attorney: Seek the advice of a bad-faith lawyer with experience in bad-faith insurance claims. They can assess the strength of your case, guide you through the legal process, and represent your interests in negotiations or court proceedings.
  • Compose a Demand Letter: Your attorney can help you draft a demand letter to the insurance company outlining the alleged bad faith practices and the damages you seek. 
  • Negotiate: In many cases, bad faith claims can be resolved through negotiations. Your attorney will discuss this with the insurance company for a fair settlement.
  • File a Lawsuit: If negotiations fail, your attorney may proceed to file a lawsuit against the insurance company. The complaint will detail the allegations of bad faith and the damages you seek.
  • Discovery Process: In this phase, both parties related to the case will exchange vital information and evidence. This may involve depositions, requests for documents, and other forms of information gathering.
  • Trial or Settlement: Depending on the case’s progress and both parties’ willingness to settle, the matter may proceed to trial or be resolved through a settlement agreement.

Need Legal Help? Contact an experienced lawyer

An experienced personal injury lawyer may help you assess the validity of your claim, understand your rights, and guide you through the process. They will help draft a demand letter outlining the alleged bad faith practices and the damages you seek and will negotiate with the insurance company to seek a fair settlement.