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Dawson and Rosenthal
Dawson and Rosenthal

Understanding the Duty of Good Faith in Car Insurance

When a car accident happens, you may take steps to get medical care, file a police report, and contact your car insurance provider, assuming they are going to spring into action to provide you with the funds you need to pay your medical bills and get your car repaired. That does not always happen. One core component of this is understanding the duty of good faith in car insurance.

What Is the Duty of Good Faith?

The duty of good faith is an obligation that insurance companies have to provide their policyholders with fair treatment. It means that the insurance company is required to treat its policyholders in a fair and reasonable manner. Typically, this means that the company needs to act quickly to investigate any claim and then decide on paying that claim based on the coverage outlined in the policy.

Also important, the insurance company should not only be looking for ways or reasons not to pay the claim but also just looking for reasons to pay the claim. When a company does not act in the duty of good faith, it is said they are acting in bad faith.

Common Ways Insurance Companies Act in Bad Faith

To know if the insurance company is acting in good faith, you need to look at what they are doing and how that could be interpreted as bad faith. Some examples include:

  • Denying coverage outright even when the policy covers the claim and losses.
  • Refusal to provide a reason for denial is another indication of acting in bad faith – if they deny a claim, they need to communicate why that is.
  • Offering to pay a claim but doing so at a level that is far below what the claim is worth and what the insurance policy covers.
  • Threatening legal action against the policyholder for submitting claims or threatening their representatives if they take legal action against them.
  • Using biased experts who may be reporting a much lower expected payout than what any other party would require.
  • Delaying the claims process, often in a method that seems endless, making the policyholder wait for no real reason for payment of the claim.

Bad faith acts can be numerous, and this list is not everything that could be considered bad faith. Insurance companies have rights to keep in mind. For example, they do need time to investigate claims. They have the right to ask for more information. They can also ask for details to verify that what happened to you really did occur. However, they must act in good faith.

What You Can Do if an Attorney Breached Their Duty of Good Faith in Car Insurance?

If you believe the insurance company violated their duty of good faith for your car insurance claim, we encourage you to stop speaking to them and contact our attorneys instead. Allow our legal team at Dawson & Rosenthal, P.C. to investigate what occurred and to provide you with more insight into the legal rights you have moving your case forward.