Bad Faith Insurance

Insurance Companies

Find a Lawyer in Your State

Need Help?

Find a Lawyer Near You

Call Today: (800) 483-0899

Submit your Bad Faith Insurance claim details for a free, no obligation case review

Get Started:

Bad Faith Filing and Bankruptcy

"Bad faith filing" — usually a bad faith bankruptcy filing — is another tactic used by insurance companies to avoid paying benefits to policyholders and meeting other legal obligations. Insurance companies are widely known to engage in a multitude of practices that are designed to save the company money and return a high profit to company's shareholders. These "bad faith" practices are conducted at the expense of the innocent individuals who signed up for insurance policies to protect their:

health
families after a policyholder's death (i.e., life insurance)
vehicles (auto, truck, boat, motorcycle)
finances (e.g., long-term care or disability insurance)
business
home or rental property

Insurers use false means, fraud, bias, and outright forgeries to deny, delay or short-change the insurance benefits that their policyholders are entitled to. A bad faith filing is another means that some insurers have used to avoid fulfilling their obligations to policyholders.

Bad Faith Bankruptcy Filing

When an insurance company goes forward with a "bad faith bankruptcy filing," it's a little like when a private individual files for bankruptcy simply to avoid paying his bills even though he is able to pay off some or all of his debts. Although many — perhaps most — personal and business bankruptcies are done for legitimate reasons, there are a number of bankruptcies that are filed in an attempt to escape financial obligations that could in reality be met by the individual (or insurance company).

Determining Good vs. Bad Faith Bankruptcy Filing

Determining whether a business that is filing for bankruptcy is doing so in "good faith" is a major part of a bankruptcy judge's job. There is no clear, detailed definition of "good faith," just as there is no single definition of "bad faith" business dealings. Courts across the U.S. have had to use legal precedents and their own judgment to decide whether an insurance company filing for a business bankruptcy is acting in good or bad faith. A court will consider factors such as:

the nature of the insurance company's debt
the timing of the insurance company's bankruptcy filing
how the insurance company's debts arose
the insurance company's motive in filing for bankruptcy
how the insurance company's actions will affect its policyholders
the insurance company's treatment of policyholders before and after the bankruptcy petition was filed
whether the insurance company has been forthcoming and truthful with the Bankruptcy Court

If an insurance company with whom you have a policy is filing for bankruptcy, it's in your best interest to discuss your concerns with a knowledgeable insurance bad-faith lawyer in your area. To schedule a consultation, contact an experienced bad faith attorney today .

Online Lawyer Source

Lawyers & Legal News Near You

Need Legal Help?