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Bad faith and insurance claims

On Behalf of | Oct 18, 2021 | Bad Faith Insurance Claims

People purchasing insurance policies seek to protect their assets and financial stability. For example, liability coverage on an Arizona homeowners or auto insurance policy could protect personal wealth. Unfortunately, some policyholders might discover an insurance company tries to avoid making required payments. Such actions are known as “bad faith,” and the customer could sue an insurance company to recover duly owed funds.

Examining bad faith insurance coverage

“Bad faith” is a legal term that refers to an insurance company’s refusal to honor a valid claim. Bad faith could take other forms, such as not taking steps to investigate a claim within an acceptable timeframe. So, if the insurance company refuses to investigate a leaky roof promptly, that could be bad faith. When the insurance company claims the loss is from neglect and not a weather incident, such actions might also be bad faith despite evidence to the contrary.

Policyholders may benefit from reviewing their contract or hiring a qualified professional to perform the service. Insurance policies might come with exclusions, and the companies must disclose those exclusions. Failing to do so or misrepresenting an exclusion could be a form of bad faith.

Addressing bad faith concerns

A bad faith insurance claim denial could lead to litigation. If the judge and civil jury believe the insurance company acted in bad faith, a judgment in the policyholder’s favor may result. The insurance company might settle before a judgment, as doing so might be less punitive for the company.

Receiving a low settlement offer may aggravate policyholders, but a low offer is not necessarily bad faith. The client may hire a representative to enter into negotiations with the insurance company. The final result could be an offer substantially higher than the initial one.