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Answering a few basic bad faith insurance questions

As we have outlined on this blog, bad faith insurance is a convoluted area of law that can frustrate even the most patient of plaintiffs. Even though insurance companies are supposed to act in good faith, there are times where they do not act in the best interests of their clients. This is when a "bad faith" claim can arise.

What conduct, behavior or action constitutes "bad faith"? Bad faith hinges on deception and unreasonable acts by your insurer. If they misrepresent the claims or your policy; if they misconstrue the language in a policy purely to favor their bottom line; if they act in an abusive manner towards their clients; if they fail to investigate the claim in a thorough manner; or if they purposely use an improper standard to act upon a claim; then the actions of the insurance company constitute "bad faith."

How do you prove "bad faith" on the part of an insurance company? This depends on state laws, but in general you have to prove the existence of a policy and then expand upon the details involved in the specific claim that was not fulfilled. You have to show that the insurance company's conduct was unreasonable, and why they were reckless in acting in this unreasonable manner.

Are damages involved in a "bad faith" lawsuit? Yes they are, and depending on the case, the damages can be wide ranging. Punitive damages, economic loss as a result of the bad faith act, interest, and contractually obligated penalties can all be involved in the damages of a bad faith claim.

Source: FindLaw, "Bad Faith Disability Claim Denial Lawsuit Basics," Accessed June 22, 2016

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