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Trial Advocacy

When does a claim denial become bad faith?

On Behalf of | Nov 1, 2022 | Insurance Litigation

When you submit an insurance claim, you do so because you believe that the policy you carry should cover your situation. Maybe your car ended up severely damaged in a hit-and-run crash in the parking lot at your office. You have to make a claim against your own uninsured motorist coverage because the police have yet to find the driver who hit you.

Perhaps there was a storm that damaged your house, and you’ve made a claim against your homeowner’s insurance policy. You need the funds that insurance would provide if you are to fix your vehicle or repair your home. However, the insurance company has been uncooperative.

What at first seemed like a ridiculous delay has now turned into an unfair claim denial. When do you have the right to take action because a denied claim is actually bad faith insurance?

When the policy should cover the claim

The most straightforward bad faith insurance claims arise when a policyholder has documents showing that they have active coverage that applies to their current situation. They have documentation of financial losses and records that substantiate their claims that the policy they purchased applies.

Sometimes, people don’t understand the fine print in their insurance policies and may believe something has coverage when it does not. A thorough review of your policy paperwork is necessary to ensure your claim was a viable one.

What does a bad faith insurance claim involve?

If you have attempted to work with the insurance company and they have denied your claim and refused to cooperate with you, then you may need to take them to court. Pursuing a lawsuit alleging bad faith insurance practices could result in a judge ordering the insurance company to pay your claim. Sometimes, there could also be punitive damages possible, depending on the circumstances.

It can take many months to resolve a bad faith insurance claim after a company doesn’t pay what you believe it should. Federal and state laws protect you as someone who purchases insurance and give you the option of taking civil action when the insurance company doesn’t uphold its policy as it should. Learning more about bad faith insurance claims can help those fighting an unfair claim denial get the compensation and justice they deserve.