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Bad Faith Lawsuits

A bad faith lawsuit can be brought against an insurance company when the company has acted in bad faith. Such a lawsuit is applicable in cases such as when an insurance company unreasonably or willfully denies benefits to an insurance policy holder under an existing policy. Automobile, disability, life, health, and property insurance companies that act in bad faith can all be charged in a bad faith lawsuit. These legal actions are also known as "unfair insurance claim" lawsuits.

A bad faith lawsuit charges an insurance company with failing in their duty to act in good faith, which is an insurance company's implicit responsibility to uphold. "Good faith" involves placing a policyholder's interests ahead of the insurance company's financial interests, adjusting claims within a reasonable timeframe, communicating the exact policy provisions by which a claim has been denied, and being open and honest in dealings with policyholders. An insurance company, acting with good faith, has the responsibility to find coverage that will pay a claim rather than finding a way to avoid paying a bad faith claim.

Insurance Bad Faith Lawsuits

A bad faith insurance lawsuit falls under the jurisdiction of the state legislation and justice system. There is no federal law that governs the standards of insurer conduct. Each state implements their own laws regarding bad faith lawsuits. Most states have an Insurance Department that is responsible for:

  • Monitoring insurance companies and insurance agents
  • Enforcing all applicable insurance laws
  • Handling any consumer complaints that should arise

If an insurance company acts in bad faith, a policyholder has the legal right to seek compensation for damages in a civil bad faith insurance lawsuit. In such a lawsuit, a victim may seek restitution for the amount of the original claim, the damages that were caused by the denial, and compensation for pain and suffering. In some cases punitive damages are awarded in a bad faith lawsuit in order to deter others from acting in bad faith. A bad faith lawsuit may also involve breach of contract charges against an insurance company.

Suing an Insurer for Bad Faith

A bad faith lawsuit attorney can help a victim of insurance fraud recover their damages while best protecting their legal rights and interests.

Every state's laws governing bad faith lawsuits are different. It is important to retain the legal services of an attorney who knows the laws applicable to your insurance situation. Statutes of limitation in bad faith lawsuits depend on the type of insurance policy in question, the theory behind your case, and the laws in your state. Contact a bad-faith insurance attorney in your area and protect your rights under the laws of your state.

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