Insurance Bad Faith FAQs

If an insurer is found to have acted in bad faith, the policyholder may be entitled to recover an amount greater (and in some cases, much greater) than the insurance policy limit, or the amount of the claim that was wrongly denied by the insurance company. Bad faith insurance lawsuits not only serve the purpose of compensating the insured, but can also discourage insurance companies from acting in bad faith in the future.

Insurance companies have the right to deny claims where the policyholder has violated the insurance contract, where the claim is not covered by the insurance policy, or the claim is fraudulent. If your insurance company denied a claim and you believe the denial may have been unreasonable or in bad faith, contact a bad faith insurance lawyer to discuss your rights.

If you need to make a claim with your insurance company, you should submit your claim as soon as possible after the triggering event (such as an auto accident; damage to your home; receipt of medical bills or a referral for medical services by a doctor). It is also helpful to contact an agent at your insurance company immediately to notify him or her of your claim. Review your insurance policy for relevant provisions. Carefully document your claim and any interactions you have with your insurance company. You have a duty to cooperate with your insurance company, but is always best to have an attorney before giving any formal recorded statements regarding your claim. You should answer any questions your insurance company asks truthfully, completely, and accurately.

Insurance companies have a duty to defend, which means that insurance companies must provide legal representation to a policyholder in a lawsuit that seeks damages within the scope of the insurance policy coverage. If your insurance company is not defending you in a lawsuit, you may have a bad faith claim against your insurance company.

When an insurance company intentionally offers an unreasonably low settlement, this could be a basis for a bad faith claim. Insurance companies must deal with policyholders in a reasonable, fair manner. If your insurance company has engaged in intentional “low-balling” during the claim settlement process, you should contact an attorney to discuss your rights.

Jury verdicts in bad faith insurance lawsuits can range from thousands to millions of dollars. The jury will consider the financial losses you suffered as a result of your insurance company’s bad faith conduct, the severity of the insurance company’s conduct, and in some cases, your mental pain and suffering and in some cases damage to your physical or medical condition as a result of the insurance company’s conduct.

Generally, the statute of limitations for a bad faith insurance lawsuit is two years from the date of the insurance company’s bad faith conduct. However, it can be very difficult to determine when a claim for bad faith against an insurance company accrues (meaning when the statute of limitations begins to run). You should contact an attorney right away if you believe your insurance company is acting in bad faith. A delay could result in your claim being barred by the statute of limitations.