What is Bad Faith Insurance Law?
Bad faith insurance law is made up of state and federal laws that govern the conduct and practices of insurance companies. Bad Faith insurance law is passed to protect consumers from becoming victims of the many bad faith practices used by some insurers.
There is no single bad faith insurance law that governs the actions of all insurance companies. An example of an insurance bad faith law is ERISA (the Employee Retirement Income Security Act). This federal law sets standards for the protection for individuals in most of the voluntarily retirement plans in the United States.
There are many ways that an insurer may act in “bad faith” toward a policyholder. When anyone enters a contract with and pays premiums to an insurance company, the insurer has the legal duty to act in good faith.
An insurance policy is a contract between the policyholder and the insurance company. In exchange for payment of premiums, the insurance company agrees to:
- Provide the coverage described in the policy
- Act fairly and in good faith towards its policyholders
- Consider the interests of its policyholders equal to its own interests
When an insurer fails to act in good faith, bad faith insurance law states that they are in breach of contract and may be responsible for all resulting damages.
Types of Bad Faith Insurance
Unfortunately, insurers of all types (life, auto, property, business insurance, etc) might engage in bad faith with their insured. Bad faith insurance laws might be of help if an insurance company:
does not promptly or thoroughly investigate a claim
- Refuses to settle a case
- Shortchanges benefits
- Unreasonably delays the payment of benefits
- Uses an unreasonable interpretation of the policy’s terms
- Wrongfully denies a claim
- Passes a claimant’s case around to different adjusters as a stalling tactic
When policyholders suffer due to an insurance company not acting in the good faith, bad faith insurance law enables them to pursue a remedy. A civil lawsuit can be pursued for compensation for losses (restitution). Punitive damages may also be awarded when intentional or malicious wrongdoing is found.
Bad Faith Insurance Law Remedies
If you suspect that your insurance company has committed a violation of bad faith insurance law, it is in your best interest to speak with an experienced bad faith insurance law attorney at D. Miller & Associates, PLLC. The bad faith insurance law attorney will thoroughly evaluate your claim and fight to recover the compensation to which you are entitled.
Not every denied claim is a result of bad faith insurance. However, when an insurance company acts in an especially outrageous or unreasonable manner, it should be held accountable and may be sued under bad faith insurance law. To discuss possible insurance litigation with a member of our experienced legal team please fill out the form or call us today.
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