Bad Faith Statutes
Bad faith statutes are generally state (not federal) laws that pertain to the practices that businesses (including insurance companies) should not engage in. The concept of "bad faith" is not well defined, but bad faith statutes attempt to describe the conduct that will be judged bad faith. Insurance companies are well known for their bad faith practices, such as:
- Misrepresenting or concealing information about an insurance policy
- Failing to respond promptly to a policyholder's claim or even to the policyholder's attempts to discuss their concerns with the insurance company
- Refusing to pay insurance benefits without a legitimate reason
- Failing to disclose the reason(s) for a denial of insurance benefits
- Attempting to settle a claim with insufficient compensation
Bad Faith Statutes Vary by State
Bad faith statutes vary from state to state, requiring a plaintiff's attorney to be familiar with the specifics of the state bad faith statutes and the insurance case law in a given region of the country, to most effectively represent a client's interests.
State bad faith statutes and federal insurance laws govern the responsibilities of insurance companies to claimants, but in some cases, the insurer will use the complexities of these insurance laws and the fact that many people will not think to challenge the decisions of an insurance company in order to avoid paying for claims. Insurance companies, after all, do not make money by paying claims; they make money by collecting premiums.
As bad faith insurance lawyers continue to uncover corruption in the industry, more people are becoming aware of the necessity of challenging insurance decisions that seem inappropriate. If a company is found guilty of violating one or more bad faith statutes, the plaintiff is entitled to collect damages stemming from the denial of the claim. In addition, bad faith statutes in many states allow for punitive damages if the circumstances of the case are especially heinous.
Ask a Plaintiffs' Attorney about Bad Faith
If you or a loved one has submitted a claim to an insurance company, which you feel has been unjustly denied, you may have legal rights under the bad faith statutes in your state. Due to the complexity of insurance law and the need for careful attention to the specific details of each case, it is highly recommended that you consult an bad faith lawyer who has experience working in insurance law. You should also be sure to keep detailed written records of all aspects of the case, including correspondence with the insurance company, information on insurance laws in your state, etc. Contact a bad faith insurance attorney today.
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