Bad-Faith Claim

Examples of Bad Faith Insurance Practices

Bad faith is fraud or dishonesty in a transaction. A bad-faith insurance claim arises when:

• The insurance company denies benefits.
• The claim was a covered loss.
• The insurance policy was valid.
• The company knew or should have known there was no reasonable basis for denying the insurance claim.

Attempts to deceive an insured or claimant or deny them their rights can be considered bad faith. Examples of bad faith insurance practices include, but are not limited to:

• Failing to acknowledge a filed claim
• Intentionally misinterpreting the insurance policy terms
• Failing to conduct a thorough and prompt investigation of filed claims
• Refusing to communicate with an insured or claimant about their claim
• Changing the insurance policy terms after a claim is filed
• Using coercion or threats to force a claimant to settle
• Failing to provide a valid reason for denying an insurance claim
• Intentionally delaying the claims process, such as requesting unnecessary or overly burdensome documents or information
• Offering a settlement that is much lower than the case is worth
• Failing to issue a prompt settlement check after the parties sign a settlement agreement

An insurance company has the right to deny claims. Not all denials indicate bad faith. For example, an insurance company may deny a claim because the policy has expired or does not cover the loss, or because of valid disputes of liability or damages. Contact an attorney immediately if an insurance company denies your claim or acts in bad faith. A personal injury lawyer can review your case to determine if the company acted in bad faith.