What is An Insurance Breach of Contract?
Anytime you enter into a contract with another individual or business, you expect the other party to uphold their end of the deal. This is certainly true when it comes to insurance carriers, as we rely on them to make payments in the aftermath of us sustaining injuries or incurring property damage. Unfortunately, there are times when insurance carriers breach the contract they have with policyholders, and this can put individuals into a very tough spot. Here, our San Diego bad faith insurance lawyers want to discuss what an insurance breach of contract is and what your options are if this happens to you.
Insurance contracts should always be upheld
An insurance policy provides policyholders with protections against any losses they may incur that are covered under the terms of the contract. And we want to be very clear – an insurance policy is a contract between the policyholder and the insurance carrier. When the insurance carrier has committed to the contract, they are bound by state law to help, assist, and support the policyholder in their time of need. If the insured person has an accident, the insurance carrier is required to provide all services and coverage outlined in the signed contract.
How does a breach of contract occur?
Insurance carriers can breach a contract in any number of ways. For example, if the insurance carrier denies the rights of the policyholder, this will be considered a breach of contract. If the insurance carrier decides to only pay for part of a claim even when the policy explicitly details what the insurance carrier is responsible for paying, this will be considered a breach of contract.
The following are some of the most typical ways that a breach of contract occurs with an insurance carrier:
- The insurance carrier unreasonably denies a claim.
- The insurance carrier delays paying a valid insurance claim.
- The insurance carrier misinterprets the wording of the contract.
- The insurance carrier fails to provide assistance to the policyholder.
- The insurance carrier denies a claim without properly investigating it.
- The insurance carrier denies specific benefits mentioned in the contract.
Is a breach of contract considered insurance bad faith?
Insurance bad faith involves the insurance carrier’s refusal to pay a claim without any reasonable basis or without properly investigating the claim in question. Insurance bad faith is illegal, and specifically governed under California state law. Insurance carriers in this state owe a duty of good faith and fair dealing to any person they insure and have a contract with.
A breach of an insurance contract by the insurance company could leave the carrier open to claims of bad faith insurance practices. If you suspect you have been the victim of bad faith insurance practices at the hands of your insurance carrier, you should speak to an attorney about your case immediately. If you have been the victim of bad faith insurance practices, you may be able to secure compensation, not only for the original incident in question but also for what you have been through concerning the incident of bad faith.