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What is a bad faith insurance claim?

On Behalf of | Sep 30, 2021 | Uncategorized

Whenever California policyholders make insurance claims, they must face the realities of dealing with their insurers. These businesses deny claims, in part to make it more difficult to get money from them. This is in spite of a contract for coverage. Policyholders can file bad faith lawsuits, depending on the reason why the insurance company denied the claim.

Insurance companies are businesses that try to keep their costs low

Insurance companies have a number of tricks that they use when they are trying to deny claims. One of their favorite weapons is to misrepresent the language of the policy in using it against the policyholder to deny the claim. This is a common tactic to avoid holding up their end of the contract. They may also ask for more proof of the claim than is required by the policy. The insurance company may also unreasonably delay consideration or payment of your claim. All of these may be examples of bad faith. They must have a legitimate reason for denying a claim that is firmly based in the language of the contract.

The state protects policyholders from insurance company tactics

California has strong laws to protect businesses and consumers from practices like these. Besides filing a lawsuit to have your claim covered, you can also sue the insurance company directly for additional damages on top of that. A jury may even award punitive damages if the insurance company’s actions are egregious enough. Additional bad faith losses can include your own economic damages and emotional distress that you suffered when your claim was denied.

Insurance companies cannot simply do whatever they want because your policy is a contract, and it gives you rights. If you believe that your claim was unreasonably denied, or the insurance company did anything else that was worse than a simple mistake, litigation is a possibility. You may be able to obtain damages for their conduct.