The duty of good faith and fair dealing is implied in every insurance policy. However, not all insurance companies live up to their contractual agreements. When an insurer unreasonably or willfully denies benefits on a valid claim, it may be guilty of insurance bad faith.The following are signs of bad faith from your insurer:
- Failure to investigate a claim properly, including investigating only those aspects that would support a denial
- Undue delay in processing a claim
- Deliberate misinterpretation of policy language
- Non-payment of undisputed parts of the claim
- Arbitrary or unreasonable demands for proof of loss, including asking you to keep resubmitting the same form, transferring the claim to multiple adjusters and more
- Failure to disclose policy limits and explain applicable policy provisions or exclusions
- Offer of a settlement far below what is expected, given the policy limits and actual damages involved
- Cancellation of an insurance policy to avoid paying a claim
If your insurance company fails to live up to its obligations, it may be liable for damages in a variety of ways: (1) Violation of the covenant of good faith and fair dealing. This permits the recovery of actual damages, as well as non-economic losses – including mental anguish, emotional distress and, if appropriate, punitive damages; (2) Breach of contract. When you buy insurance, you enter into a contract with the insurance company. Its failure to live up to the terms of the agreement allows you to recover the amount of benefits you should have received under the policy.
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