In broad terms, a bad faith insurance practice is any matter that involves a wrongful denial of an insurance claim by the insurance carrier. The insurance policy you hold with your insurer is a contract, and your insurance company has an obligation to act in “good faith” when you make a claim under your policy. If your insurance company unreasonably withholds, delays, or underpays benefits, this generally is considered a bad faith insurance practice.
As a Miami insurance claims attorney and former adjuster, I recognize that insurance companies often deny claims for any reason they can advance that passes the “giggle test”. Even when carriers concede coverage, they routinely attempt to underpay claims. When courts evaluate an insurance company’s conduct in handling a claim, they will usually consider whether the conduct was “reasonable”. In the majority of jurisdictions, an insurance company is not permitted to put its own interests above that of the policyholder. An insured attempting to prove bad faith basically must prove not only that the insurer failed to comply with the terms of the policy but also that the insured had no cause not to pay the benefits. We have provided some answers to common questions about insurance bad faith practices in this two-part blog.
When can insurers lawfully deny a claim?
The insurance company generally can deny a claim if the insured has failed to perform duties required under the policy like paying premiums, providing notice of a claim, submitting a sworn proof of loss and other duties imposed under the policy. An insurer may also deny a claim when the peril or damage is not covered by the policy. Finally, an insurer may base a denial on misrepresentation in the application or claims process or fraud.
What kinds of conduct constitute bad faith by an insurance carrier?
Because there are literally hundreds of practices that can constitute insurance bad faith, it is impossible to list them all. However, some common examples of insurance bad faith include: unreasonable delay in paying a claim; unreasonable interpretation of policy language; refusing to pay the full value of the claim; lack of a timely and thorough investigation of a claim; unreasonably denying benefits under a policy, etc. Bad faith by your insurance company constitutes more than just a breach of contract. Bad faith conduct involves “unreasonable” conduct often involving deception, fraud or dishonesty.
What damages are available in an insurance bad faith claim?
The main advantage of a bad faith claim is that your recovery is not limited to the full value of your claim. An insured may also seek consequential damages that might not be available under a breach of contract claim. While the precise non-contractual damages available will depend on the law in your state examples might include attorney fees, costs of suit, punitive damages, and emotional distress.
How should I proceed if I suspect my insurance company is acting in bad faith in processing my claim?
One obvious option is to seek legal advice from an experienced insurance claims attorney. Many law firms that handle insurance bad faith claims offer a free consultation, so you can have your claim evaluated and obtain some free legal advice about how to proceed. If you are not ready to speak to an attorney, you should carefully review your policy and all of the correspondence you have had with the insurance company. A certified letter should be sent to the Director of Claims of your insurance company citing the relevant provisions that make the denial, delay, or lowball offer by the insurer unreasonable. A complaint can also can be made with the Florida Department of Insurance.
If an insurance company delays, denies, or lowballs your claim, you should consider speaking to an experienced Florida property damage attorney. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.