Common Questions about Insurance Bad Faith Practices

J.P. Gonzalez-Sirgo
Founder of J.P. Gonzalez-Sirgo, P.A.

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.

Even when insurance companies 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 insurance company had no cause not to pay the benefits. 

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, failing to submit 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?

In a bad faith claim your recovery is not limited to the full value of your contract 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 you proceed if you suspect that your insurance company is acting in bad faith?

You should speak to an experienced insurance claims attorney. 

You can reach Miami Insurance Claims Lawyer J.P. Gonzalez-Sirgo by dialing his direct number at (786) 272-5841, calling the main office at (305) 461-1095, or Toll Free at 1 (866) 71-CLAIM or email Attorney Gonzalez-Sirgo directly at [email protected].

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