Bad Faith Insurance Claims

If an insurance company is acting in good faith it will:

* pay or deny the claim within a reasonably prompt period of time
* provide all information that the policyholder reasonably asks fo
* explain in writing each contract term that specifies why the claim is being denied
* attempt to find valid reasons to pay the claim
* not exclusively find reasons to avoid paying the clai
* treat the policyholder's financial interests the same as their own
* investigate the claim when notified by the policyholder of the loss
* conduct a reasonable investigation based on current facts and evidence
* not offer a settlement that is substantially lower than called for in the polic
* not compel a policyholder to sue because a substantially lower settlement was offered
* not act unreasonably in settling a claim within policy limits that exposes policyholder to further financial claims (in case the policyholder was at fault in an accident)
* not attempt to settle a claim that was altered without notice to the policyholder

When thinking of going forward with a bad faith insurance claim, it is important to realize that the insurance company is not the only party that is expected to be acting in good faith. The policyholder is also held to the good faith standard as well and as such needs to submit written documentation in a timely manner, return phone calls and follow proper procedures as outlined in the policy.

If a claim is initially denied, the policyholder in most cases can appeal the decision with the insurance company and must follow the outline procedures for doing this. Most courts will not hear a case unless the plaintiff exhausts all possible appeals outlined by the insurance policy first.

It is important to note in bad faith insurance claims that when some of the policy terms are ambiguous, confusing or open to interpretation, the courts generally side with the policyholder over the insurance companies as long as the alternative way of reading the policy is deemed reasonable. States generally have a Departments of Insurance or some similar entity and more information may be gathered from this organization on this issue.