Is there a difference between insurance deceit and bad faith?

An insurance company can deprive you of your rightful coverage without acting in bad faith. Sometimes, people make mistakes. Of course, whether an agent accidentally fails to approve your proper claim or wrongfully denies your claim on purpose does not matter much when you are facing huge bills that insurance was supposed to pay for.

A subsidiary of Travelers Indemnity Co. is appealing a nearly $4 million verdict in a bad faith insurance lawsuit. The subsidiary, Charter Oak Fire Insurance Co., argues that its agents did not act in bad faith.

In fact, the jury did not find Charter Oak guilty of insurance bad faith. In the underlying case, a woman was badly injured in crash while riding in a car in 2008. The car was a loaner owned by a dealership that carried $1 million in coverage for under-insured motorists.

But when an attorney for the woman contacted a Travelers claims agent, the agent said there was no coverage for the woman under the dealership’s policy. The attorney later discovered the truth and Travelers eventually paid the woman.

At trial, the jury found that Travelers acted deceitfully, but did not find the company guilty of bad faith. Part of the award was $1 million in punitive damages. Speaking before the appellate panel of judges, a lawyer for Travelers argued that there could be no deception without bad faith.

The Argus Leader reports that the judges reacted skeptically to this line of reasoning. “It’s bad enough to deny the claim when it shouldn’t have been denied,” one of the judges remarked. “But the salt in the wound is her [the agent] lying about it.”

Legal technicalities are often confusing to the layperson, but can dramatically affect your rights. That is why it is important to retain a bad faith insurance attorney who is thoroughly familiar with the law and is experienced building strong cases for his or her clients.

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