We often rely on insurance as a safety net and protection for unexpected events in life. As a policyholder, when you pay your premium, you assume and expect your insurance company to be there when needed. But what happens when your claim is unfairly delayed? Or worse, denied? Sometimes, insurers can act unreasonably and in bad faith. If that is the case, you might have a claim for bad faith. Contact our insurance bad-faith attorneys in Los Angeles for guidance and assistance.
What Is Bad Faith?
Bad faith is a legal term for dishonesty or fraud in a transaction. It can mean having a dishonest purpose, untrustworthy performance of duties, neglect of fair dealing standards, or having fraudulent intent.
Bad faith on the part of an insurance company typically means the insurer has failed to uphold their legal obligations by inexplicably denying your claim to save on profits or failing to defend against a lawsuit properly. In other words, they have failed to fulfill their contractual duty.
Bad-faith conduct can occur with any type of insurer or policy, including consumer, personal, or business policies.
If you suspect bad faith has occurred, the first step is usually to take a close look at the policy itself. It can be challenging to decipher the language in the policy and determine what the insurance company is obligated to do. Often, policies can have vague or ambiguous language that can make it challenging to prove your claim without the help of insurance bad-faith attorneys in the Los Angeles area. A seasoned attorney can help you succeed even if the policy is vague.
Seeking Compensation for Bad-Faith Insurance Practices
You might be entitled to compensation if your insurance company acts in bad faith while addressing your claim.
First-Party Claims
As a policyholder, you can file a claim with your insurer. Suppose they delay, deny, or in any way impede your ability to pursue your claim. In that case, your Los Angeles insurance bad-faith attorney can assist you with filing a claim or, if necessary, a lawsuit to recover damages for breach of contract.
Third-Party Claims
Sometimes, you are not the one filing the claim but instead defending against one because you have been accused of harming someone else. In that case, your insurer must protect you through your policy against third-party claims. In other words, when someone sues you for injury or damages they allege you caused, your insurer must defend you.
No matter the case, your attorney will know the necessary steps to take when the insurance company refuses to act in good faith. We will advocate to ensure you receive the total value of what you are owed under the law.
Covenant of Good Faith & Fair Dealing
All insurance contracts between the insurer and the policyholder have what is known as an implied covenant of good faith and fair dealing. This clause means the insurance company must act in good faith when fulfilling its contractual obligations. Further, the insurer cannot work in a way that will interfere with the policyholder’s rights, including receiving benefits, investigating liability, defending against third-party claims, and acting in good faith to settle all claims.
Suppose an insurance company does not meet its obligations under the contract. In that case, it breaches the covenant of good faith and fair dealing, and the insured may have a valid claim against the company for bad faith. Generally, if the bad-faith claim is based on a breach of contract, you have four years from the date you believe you were denied to bring a lawsuit against the insurer.
Examples of Insurance Bad Faith
Many specific acts can constitute an insurance company’s bad faith. Some common examples of bad faith include the following:
- Failing to conduct a prompt, fair, and reasonable investigation;
- Unreasonable refusal to settle a claim;
- Misrepresenting coverage;
- Failure to explain a denied claim;
- Improperly denying a claim;
- Lack of disclosure and transparency;
- Impeding a policyholder’s ability to defend a lawsuit;
- Refusal to pay a valid claim or delaying payments;
- Refusing to communicate with policyholders about claims or claim status;
- Intimidation tactics (e.g., adjuster intimidating you into accepting a low settlement offer); and
- Making it difficult to obtain documents or apply for benefits.
If you have difficulty dealing with your insurance company and feel something is amiss, you should not ignore that instinct. While the above list are specific examples of what might constitute bad-faith dealings, they all usually involve similar signs, actions, or inaction. If you believe you were the victim of bad-faith bargaining, it is time to speak with a seasoned attorney to discuss your options.
What Damages Can I Seek for Insurance Bad Faith?
Depending on the situation, you can seek different types and amounts of damages for your bad-faith claim.
Contract Damages
In bad-faith insurance cases, one of the most likely types of damages you will be awarded is contract damages. Contract damages represent the value of your claim. In other words, if your damages are $250,000 and within your policy limits, you will be entitled to recover the total of $250,000 plus any accrued interest.
Extracontractual Damages
Extracontractual damages are damages that are outside of the policy coverage. They can be economic or non-economic. Economic damages represent the financial loss incurred by the policyholder, while non-economic damages compensate for any intangible loss or harm, including pain and suffering.
Punitive Damages
Although much less common than contractual and extracontractual damages, the courts will award punitive damages under certain circumstances. Unlike economic or non-economic damages, punitive damages are not meant to compensate a plaintiff for specific losses. Instead, judges impose punitive damages to punish a defendant for particularly bad behavior. In some instances, you may be able to secure punitive damages if there’s evidence the insurer acted with malice or fraud.
Bad-Faith Insurance Lawyers
At Peerali Law, we are a boutique law firm providing individualized attention to each of our clients. We are fearless in taking on even the largest insurance companies. We understand the law and will seek the most damages available for your claim, including advocating for punitive damages where appropriate. Contact our bad-faith insurance attorney in California today.