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Bad Faith Insurance Cases On The Rise

 

Anyone who has ever “done battle” with an insurance company knows the inherent challenges of facing off against a large corporation. It is imperative to seek assistance from bad faith insurance attorneys.
 
Although it can often seem that there is little recourse when faced with a denied claim from an insurance company, the consumer (the policyholder) is entitled to certain legal rights.
 
Insurance is a legally binding contract. When an insurance company willfully negates that contract, they are considered to be operating under bad faith insurance practices.
 
Examples of bad faith insurance practices include:
  • Refusal to adequately investigate claims.
  • Any unjustified denial of coverage.
  • Withholding relevant information from a policyholder.
  • Holding up the settlement process in an unreasonable way. 
  • Refusal to negotiate on a claim.
  • Unreasonably low settlement offers.
  • Misleading terms in a policy or claim.
  • Delaying payment.
Insurance industry watchdog groups say that instances of bad faith insurance are on the rise, and that policyholders are especially at risk during difficult economic times.
 
Fight Bad-faith Insurance Companies (FBIC), a non-profit educational group that focuses on exposing the nature of bad faith insurance cases, asserts that bad faith insurance “has rapidly grown and become a pervasive and very serious mainstream problem.”
 
Fight Bad-faith Insurance Companies says the problem has become “wide spread” and that there has been a sharp increase in public writings on the topic since 1999. 
 
A November ’08 story from National Underwriter News quotes Jon Habor, chief executive officer of the American Association for Justice, as saying:
 
"Insurance companies are preying on cash-strapped consumers with tough tactics to increase profits. The current challenges facing American families are only compounded when their insurance company plays hardball in their greatest time of need.”
 
A few examples of successfully tried bad faith insurances cases:

  • A family, who lost their child in a car accident, was awarded $3.9 million after a California court determined that the insurance company had offered an unreasonably low settlement of $10,000 on a $300,000 policy. (David Clayton v. United Services Automobile Association)
  • A plaintiff in a bad faith insurance case was awarded more than $2 million because the insurance carrier acted in bad faith by initially failing to disclose policy limits. (Boicourt v. Amex Assurance Co.)
Keep in mind that no two bad faith insurance cases are the same. Circumstances vary from individual to individual, and there is no across-the-board ruling on bad faith insurance cases. Your specific policy and claim will help determine the potential for a case and monetary settlement.
 
The good news: most states agree that insurance companies must operate in good faith. The confusing news: the regulations on what constitutes bad faith insurance can vary from state to state.
 
In time, there ideally will exist a more level playing field between insurers and the insured. Every successful settlement for a policyholder in a bad faith insurance case should motivate the insurance industry to better regulate its practices.
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