Insurance Bad Faith: A Tactic of Insurance Providers

Posted by on Aug 12, 2016 in Insurance | 0 comments

In the event of death, severe illness, disability, an accident or a destructive natural calamity, one possible major source of finances for the necessary medical treatment or for repair/replacement of damaged property is Insurance, a person’s means to protecting himself or herself from financial losses, as well means to recovery.

Some individuals even choose to pay higher premiums for higher benefits when needs arise. Often, though, policy holders end up disappointed and feeling cheated as the amount of financial benefit insurance providers usually grant is much smaller than the amount stated in the policy they purchased. In many other instances, insurance firms either deny or disapprove a claim, or maliciously impede the processing of a claim.

These tactics, which are employed by insurance providers to keep themselves from making payouts, is called “bad faith.” Insurance bad faith is referred to the act of deceiving another person by deliberately and maliciously refusing to honor a contractual obligation. This act of deceit is actually a violation of the “implied covenant of good faith and fair dealing,” a law in most U.S. states that is suggested in insurance contracts. Violation of this covenant gives the policyholder the legal right to file a lawsuit against the insurance provider due to breach of contract, as well as for tort claim.

Insurance companies have an enormous responsibility towards their policy holder in the event of an injury or serious damage to their properties. Due to the goal of these companies to earn and maintain profitability, however, many resort to means that will enable them to avoid legal responsibility.

Insurers’ violation of the trust of policyholders is enough to warrant a legal action against the former and, if proven guilty of acts of bad faith, then they can end up paying policyholders an amount higher than the face value of the policy. When making an insurance bad faith claim, though, insurers should consider seeking the help of a highly-competent insurance bad faith lawyer for a firm ground in the legal fight with insurance providers. This is due to the complexity of the law and the insurance policy, which may leave policy holders more confused than clarified.

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