How To File a Bad Faith Insurance Claim?

The Warren Insurance Lawyers at Harold Law Help You with Your Insurance Claim.

There are many types of incidents or cases where a bad faith insurance claim can arise. Bad faith claims can arise anytime where an insurance policy is involved. A bad faith insurance claim is when a claim is made on an insurance policy and the claim was denied (not paid) without reasonable justification. It’s when an insurance adjuster decides not to pay an insured, but doesn’t have a good, valid reason for the denial. When this happens, this creates the basis of a separate lawsuit against your insurance company for acting in “bad faith.”

What is a Bad Faith Insurance Claim?

Every time you buy insurance coverage, the insurance company issues a policy booklet that details the terms of the insurance coverage, the amounts of the policy coverage, the things that are covered, exceptions to coverage, definitions of terms within the policy, and many other aspects of the insurance coverage. This policy booklet or document is a contract between you and the insurance company. Insurance policy documents are very detailed and basically provide the “rules” that both the insurance company and the insured has to follow. One of those rules is that the insurance company has to act in “good faith” when dealing with their insured. This means that an insurance company has to have valid, reasonable reasons for denying a claim. If they don’t, then the insured can file a bad faith insurance claim against them.

What Constitutes Bad Faith?

There are many ways that an insurance company can act in bad faith and be in violation of the insurance policy contract. The following are the main reasons that would support a bad faith insurance claim lawsuit:

  • Denial of an insurance claim without a valid and reasonable basis for the denial.
  • The claim was paid, but it was a lower value than what the policy holder asked for.
  • A delayed payment on the insurance claim well beyond what is reasonable and standard for the industry.
  • Refusal of the insurance company to adequately defend their insured against a claim made on the policy by a third party.

What Types of Claims Are Covered?

Bad faith insurance claims can arise in any situation that involves a claim being made on an insurance policy. It doesn’t matter the type of insurance. Here are some examples:

Health Insurance:

Health insurance companies may act in bad faith if they deny your entitlement to medical treatment and medical procedures for false or incorrect reasons. Sometimes a reason given by a health insurance provider is that the proposed treatment isn’t covered or that the treatment is experimental and not accepted standard practice. Sometimes the health insurance company refuses to pay for the medical procedure because they claim that the procedure isn’t medically necessary, but is elective. Health insurance companies sometimes argue your treatment is not covered based on the opinions of unqualified or untrained doctors. In many cases, health insurance companies will perform the necessary investigation or will delay paying a claim due to “red tape” within their own procedures. Regardless of the reasoning, these actions can be the basis of a bad faith lawsuit against your health insurance company.

Automobile Accident Insurance Claim:

A bad faith claim with automobile insurance can arise in many types of scenarios. Your car or truck automobile insurance could refuse to pay for medical bills you incurred due to injuries sustained in a crash. They could deny your claim for lost wages you lost due to car accident injuries, a type of coverage you paid extra for on your automobile policy. Another scenario is when you are the cause of a crash, but your insurance company refuses to pay for a lawyer to defend you against a lawsuit someone else has filed. Last, there are instances where you can file a claim for pain and suffering against your own insurance company under the uninsurance or under-insurance policies. This is where the at-fault driver didn’t have any insurance or didn’t have enough insurance to cover your injuries. Your insurance company could refuse to offer a fair and adequate settlement for your injuries, which would be considered bad faith.

Property Insurance:

Property insurance can be anything from a homeowner’s insurance policy to a business insurance policy. Any type of insurance that covers property that you own. The insurance company may act in bad faith if it denies a claim for damages to your home, your business property, contents within your business, or your personal property within your home or your apartment if you have a rental insurance policy.

Disability Insurance:

Many bad faith insurance claims arise out of the denial of disability insurance policies, particularly long term disability policies. Disability insurance is designed to award insured individuals at least partial compensation for their salary should they become unable to perform their material work duties for a defined period of time. There are many instances where LTD insurance companies will cut off disability benefits without proper justification.

What Are the Damages in a Bad Faith Insurance Claim?

There are several categories of damages that you, the insured, can win in a bad faith insurance claim. But these types of lawsuits can be very difficult and complicated. That’s why it’s very important to hire an experienced and skilled insurance bad faith litigator that has the resources to take on big insurance companies.

  • Contract or Policy Damages: This amount of money that the insurance company failed to pay as per the insurance policy contract. For example, if they refused to pay for the $20,000 worth of damage to your roof due to a tree falling on it, and that denial was in bad faith, then they’d owe you the $20,000.
  • Compensatory Damages: This compensation is the amount of money the insurance company should pay you for the emotional distress you experience due to their denial of coverage or that you have received funds that are insufficient to pay your bills. Compensatory damages can also cover the shame, embarrassment, financial problems, or loss of your professional reputation due to the denial of the claim.
  • Punitive Damages: Punitive damages are designed not to compensate you for any losses, but to punish the insurance company for their bad faith actions. Punitive damages are difficult to win and aren’t awarded in every case. But if the insurance company’s actions were pretty egregious, then the court could award punitive damages in order to teach the company a lesson in how NOT to treat their insureds.

The Warren Insurance Lawyers at Harold Law Help You with Your Insurance Claim

We believe that our insurance policies will be there to cover us and help us. But sometimes the insurance companies act unfairly and in bad faith. If you have an issue with a denied insurance claim, speak with one of our Warren insurance lawyers at Herold Law for help today. Call us at 908-647-1022 or complete our online form to schedule an initial consultation. We are located in Warren, New Jersey, and we proudly serve clients throughout the surrounding areas.