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Dawson and Rosenthal
Dawson and Rosenthal

How to Prove Insurance Bad Faith

Most insurance companies operate professionally and with honesty and integrity. Still, there are exceptions, as evidenced by the number of bad faith insurance claims filed each year in courts around the country. Insurers owe their policyholders a duty of good faith—policyholders have every right to believe (and demand) that their insurance companies treat them fairly and justly. If your insurance company has acted in bad faith when dealing with you, then you may have grounds to seek compensation via a bad faith claim

What is a Bad Faith Insurance Claim?

When you buy insurance coverage, you have every right to expect that coverage to kick in if a valid event occurs that necessitates filing a claim. You have the right to believe that the insurance company will pay your claim for unexpected events that may happen, per the terms and provisions of your policy. When this doesn’t happen—and things go awry—then the insurance company may have acted in bad faith. Prove it and the courts may penalize the insurer and compensate you. 

Implied Duties

Insurance companies spell out what policyholders can expect in the policy documents that are provided to the insured. For instance, if your home is burglarized, then your policy might pay for the pilfered items’ value, or if you wreck your car, your PIP policy may pay your lost wages for the time you’re off work to recuperate. The insurer in these instances has the implied duty to pay for the burgled goods or your lost income because the policy documents say so—and you’re relying on the insurance company to provide this peace of mind when you make your premium payments.

Insurers may try to skirt their duties to their insureds by failing to provide a reasonable reason for denial when refusing to pay a claim or refusing to investigate a claim in a timely fashion or appropriately. They may also try to settle a claim for less than its fair worth or demand that you present additional evidence for a claim when it doesn’t seem sensible to do so.

Proving a Bad Faith Claim

Proving that an insurance company acted in bad faith can be complicated but generally involves creating a paper trail or other written/electronic communication showing that the insurer: 

  • Unreasonably delayed or refused to honor a valid insurance claim.
  • Failed to initiate and investigate a claim in a timely manner. 
  • Failed to keep the policyholder abreast of the claim’s status. 
  • Failed to explain why the claim was not approved.
  • Engaged or created unreasonable delays while negotiating a settlement.
  • Misrepresented facts about the insured’s policy provisions, such as coverage limits or benefits.

Did Your Insurer Act in Bad Faith?

If your insurer acted in bad faith, reach out to us. Our legal team wants to help. We can file a bad faith insurance claim against the insurer, seeking statutory penalties and interest, economic losses, emotional distress compensation, and possible punitive damages. Contact us now to discuss your case.