What does “bad faith” actually mean?

When you file a claim with an insurance company, that company has a legal duty to act in good faith and deal with your claim fairly. The basis for this requirement lies in the fact that the insurers’ control over claims processing gives them unequal bargaining power in their relationship with their policyholders. As such, if your insurer acts in bad faith when handling your claim, you may have grounds for a lawsuit against them.

Determining exactly what constitutes bad faith, however, is not always straightforward. If you feel that your claim has not been handled fairly by your insurer, consulting an experienced attorney is highly advisable. When investigating how your insurer has handled your claim, your attorney may identify common bad faith practices, including:

  • Failure to provide the insurance protection that was promised.
  • Misleading policyholders, or misrepresenting.
  • Refusing to settle a claim in a timely manner, or refusing to settle a claim at all.
  • Unnecessarily delaying payments or failing to provide payment in full.
  • Making unreasonably low settlement offers.
  • Refusing to investigate a claim, or failing to investigate in a timely and thorough manner.
  • Canceling policies without good reason.

These deceptive and unfair practices are among the most common indicators to a judge that an insurer has failed to act in good faith. Nonetheless, in cases where a claim has been unfairly denied, delayed or otherwise mishandled, the burden of proof lies with the insured. As such, it is important to seek the advice of an bad faith insurance attorney with the knowledge and skill to present your case as effectively as possible. 

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