Insurance companies owe a duty of good faith and fair treatment to all persons insured by their company. What this means is that the insurance company is required by law to act in your best interest as a client. This includes performing proper investigations regarding your claim and doing their general due diligence on your behalf.
For example, if someone files a lawsuit against you and a judgment is rendered in their favor, your insurance company is required to pay the judgment up to the limit of your coverage.
Bad faith can cover a vast array of topics. Examples of bad faith include undue delay in handling claims, inadequate investigation, refusal to defend a lawsuit, threats against an insured, refusing to make a reasonable settlement offer, or making unreasonable interpretations of an insurance policy.
When you purchase an insurance policy, whether for life insurance, disability insurance, homeowners insurance or any other type of policy, you are entitled to the full benefits of the policy if you have a covered claim. If the insurance company refuses to pay or if it delays your payment, you may have a bad faith insurance claim.
Some states, including Florida, even allow clients that were subject to bad faith by an insurance company to sue the company for punitive damages that can exceed their policy limits. This serves mainly to deter insurance companies from engaging in future bad faith behaviors.
A famous example is State Farm Mutual Auto Insurance Co. v. Campbell, in which the U.S. Supreme Court overturned a jury verdict of $145 million in punitive damages against State Farm Insurance. Although the verdict was overturned, this represents the immense amount of financial recourse that can be awarded in a bad faith lawsuit.
Insurance companies are required to act in the best interests of their policy holders. Insurance companies also understand the serious implications that a bad faith claim can cause. Therefore, they must be very careful as to handling every claim professionally and thoroughly.
Inherently, insurance companies have a self-interest to attempt to pay as little as possible, or attempt to relinquish liability in its entirety regarding claims against its policy holders.
If an insurance company refuses to pay your claim, denies payment or offers an insufficient amount, it would be wise to hire a lawyer to enforce the insurance company’s obligations.
Call our office for a FREE consultation. In most cases, it is a good idea to obtain legal advice when you are unsure of whether or not you have a case.