An insurance policy is essentially a contract. The policyholder pays the premiums and expects the insurance company to uphold the terms of the contract for valid claims. It seems pretty straightforward, right? Wrong…!
Insurance is a business. Just like any other business, it pursues profit. It is not unimaginable that insurance companies would occasionally engage in unscrupulous practices to maximize their gains. Sometimes, insurance companies deny legally valid claims or pay less than the claim’s worth to increase the profit margin. This practice is called a ‘bad faith’ insurance practice. Bad faith insurance is both morally and legally wrong.
Policyholders have the right to hold their insurance providers responsible in the court of law for such dubious actions. Sacramento insurance bad faith attorneys can help you get justice for bad faith insurance.
Bad Faith Insurance
When an insurance agency fails to uphold its end of the bargain in a contract, it is called bad faith insurance. Insurance is one of the most cutthroat and competitive industries in the United States. That’s why certain regulations govern it. Insurance providers must act in good faith and use fair claims practices.
California laws clearly define certain acts or practices as bad faith, which must be avoided by insurance companies, such as;
- Failure to provide policy benefits without a valid reason
- Misrepresentation of the facts or policy clauses to invalidate a claim and avoid paying
- Unnecessarily dragging the feet in paying off a claim
- Having a substandard system for investigation of the claims and their validation
- Keeping a claim case in limbo (neither approving nor denying) even after the claimant submits proper proof of loss
- Refusal to properly settle a claim when liability is reasonably clear
- Refusal to settle one part of a claim to influence other parts of the claim
- Compelling a policyholder to litigate the claim when the insurance company refuses to honor the agreement in its entirety
- Attempting a settlement for a far lesser amount compared to their advertised material
- Altering the terms of an application without the knowledge or consent of the policyholder or the insurance agent
- Threatening a claimant with an arbitration award appeal to nudge him or her towards accepting a far lesser settlement.
- Not providing a prompt justification for denying a claim
- Convincing a client not to hire an attorney
- Willfully misguiding a claimant regarding deadlines for filing a claim or a lawsuit
These are but a few of the many ways an insurance provider may commit bad faith dealing. Many insurance policies are incredibly specific and subjective. Therefore, it is impossible to treat them all the same. It is better to consult an insurance attorney to ensure the validity of a contract when in doubt. Those clauses are written in very legalese, jargon-filled language that needs specialized knowledge to understand – knowledge that an insurance attorney possesses in spades.
How to handle bad faith insurance?
In the current law framework of California, you have a number of ways to remedy a bad faith insurance incident.
- A plaintiff can recover damages for every breach in the contract. It usually consists of benefits in the policy, plus interest.
- A plaintiff may also recover bad faith damages. It may include attorneys’ fees, consequential economic losses and emotional distress.
- A plaintiff may also receive punitive damages if they prove the insurance provider acted with the intentions of fraud or malice.
The size and terms of your settlement depend upon the unique circumstances surrounding each case. Contact a professional attorney to advise you on your personal case.