Insurance Bad-Faith

Insurance bad-faith law refers to the legal principles and regulations that protect policyholders from unfair or dishonest practices by insurance companies. When an insurance company acts in bad faith, it fails to fulfill its obligations to its policyholders by not handling claims fairly, promptly, or in good faith.

Key Elements of Insurance Bad-Faith Law:

1. Duty of Good Faith and Fair Dealing:
Insurance companies have a legal obligation to act in good faith and deal fairly with policyholders. This duty requires insurers to thoroughly investigate claims, make timely decisions, and pay valid claims without unjustified delay.

2. Examples of Bad-Faith Conduct:

• Unreasonable Denial of Claims: Refusing to pay a legitimate claim without a valid reason.
• Delays in Payment: Unreasonably delaying the payment of a claim without a proper explanation.
• Inadequate Investigation: Failing to conduct a proper investigation into the facts of a claim.
• Misrepresentation: Providing false or misleading information about coverage or policy terms.
• Lowball Offers: Offering significantly less than the value of a valid claim.
• Failure to Provide a Reason: Not giving a clear explanation for the denial or underpayment of a claim.
• Cancelling a Policy Retroactively: Wrongfully canceling a policy after a claim is filed to avoid paying the claim.