Bad Faith Insurance Laws
There are many ways an insurance company can act in “bad faith” to deny legitimate claims. First, they can deny that a valid claim is covered by the insurance. Second, they can deny payment or investigating a claim. Third, they can pay only a portion of the claim. In addition, under the law of most jurisdictions in the United States, insurance companies owe a duty of good faith and fair dealings to the persons or entities they insure. This duty is often referred to as the implied covenant of good faith and fair dealing with regard to the rights and interests of their insureds. An insurance company has many duties to its policyholders. The kinds of applicable duties vary depending upon whether the claim is considered to be “first party” or “third party.”
Bad Faith, Generally Speaking
Also, a common first party context is when an insurance company writes insurance on the property that becomes damaged, such as a house or an automobile. In that case, the company is required to investigate the damage. Also, they need to determine whether the damage is covered. Last, they pay the proper value for the damaged property. Bad faith, in first-party contexts, often involves the insurance carrier’s improper investigation and valuation of the damaged property. Or its refusal to even acknowledge the claim at all. Also, bad faith can arise in the context of first-party coverage for personal injuries such as health insurance or life insurance. However, those are rare cases, most having been preempted by ERISA.
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Effects of Bad Faith
Consequently, there are many nuances in this ever-expanding field of insurance litigation. As a result, the above summary describes one of the many bad faith scenarios that find their way to the Courthouse. The Dawson Law Firm welcomes referrals from attorneys. We always respect the referring attorney’s prior client relationship. Contact us today to schedule a meeting to review the case.
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