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3 potential remedies against bad faith insurers

On Behalf of | Mar 10, 2020 | Firm News

Purchasing a home is one of the more effective ways to realize the American dream. After all, if you own a house, you have a nice place to raise a family and establish communal roots. You may also build equity, allowing you to plan for retirement or other life investments. To protect your home from damage, you have home insurance. As such, if something happens to the property, you expect your insurer to cover your damages. 

While most insurance providers quickly investigate and pay insurance claims, others are not so reliable. Unfortunately, despite a legal obligation to do the opposite, some act in bad faith. Unreasonably denying claims, failing to process claims and making material misrepresentations to claimants are common examples of bad faith, although this type of insurer misconduct may take other forms. If you believe your insurer acted in bad faith, you may be able to pursue the following three remedies:

1. Breach of contract damages

Your insurance policy is a contract between you and your insurer. The contract requires you to pay premiums in exchange for your insurer covering damages. If the insurance company breaches the contract, you may be able to recover the actual value of the damage plus interest.

2. Bad faith damages

The public has an interest in keeping insurance companies honest. That is, if insurers were to regularly act in bad faith, there would be too much uncertainty in the insurance marketplace. Therefore, if you have a valid claim, you may be able to pursue bad faith damages. These include compensation for your legal bills, emotional distress and consequential economic losses.

3. Punitive damages

If your insurer engages in particularly egregious misconduct, a court may award you punitive damages. These damages punish the insurer for bad behaviors, such as malice, oppression or fraud. 

With some luck, you may never have to worry about a property insurer acting in bad faith. If you do fall victim to this type of behavior, though, the law gives you some valuable remedies. By exploring all your options, you can better protect both your home and your legal interests.