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Bad Faith Definition

The term bad faith refers to any practice of dishonesty or fraud that involves deceiving a party into entering an agreement while having no intention of ever standing up to the terms of the initial agreement. Specifically used to refer to some insurance practices, insurance bad faith occurs when an insurance company illegally finds a way to reduce or deny a legitimate claim payment.

In such cases, the insured, officially referred to as the policyholder, will likely have a legal claim and can recover compensation for their losses by filing a bad faith lawsuit. It's important to note that laws regarding bad faith vary from state to state, as do the statutes of limitations for filing a case. As a result, it is important to hire an attorney who is familiar with the specific laws of your state.

If you suspect that your insurance company has acted in bad faith regarding one of your claims, our skilled bad-faith insurance lawyers welcome you to get a free evaluation of your case. Our attorneys are dedicated to helping victims of insurance bad faith practices get compensated for their losses.

Examples of Bad Faith Practices

Insurance companies practice bad faith when they illegally deny a claim without any reason or by:

  • Failing to conduct a thorough and proper investigation of the claim
  • Misrepresenting the facts of a claim
  • Offering claim payments that are significantly lower than the claim is worth
  • Retroactively altering a policy without the policyholder's knowledge
  • Unnecessarily delaying the processing of a claim
  • Unreasonably interpreting the policy
  • Unreasonably raising premiums
  • Using incorrect legal definitions

Additionally, insurance bad faith can occur when a company refuses to insure an individual without appropriate, viable justification. Regardless of how it occurs, bad faith practices can leave policyholders with hardships, particularly if certain vital medical treatments are denied coverage.

Insurance Companies Sued for Bad Faith Practices

Although the thought of an insurance company intentionally defrauding you is unsettling, there are many advocacy groups dedicated to educating the public about bad faith. The Fight Bad-faith Insurance Companies (FBIC) group has ranked the top four insurance companies known for bad and good faith practices. Those most notorious for bad faith practices, according to the FBIC, include:

  • The Hartford
  • State Farm
  • Allstate
  • Berkshire Hathaway I.C.

Alternately, the top four insurance companies known for their consistent good faith practices include:

  • Chubb
  • Amica
  • Allianz
  • Coventry Health

For more information, consult a bad faith attorney.

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