Insurance companies hold a great deal of power during the claims process – you cannot control the manner in which they control their finances or approach your claim, and the company holds far greater negotiating power. As such, the law assumes that your relationship exists according to good faith that your company will treat you fairly. Unfortunately, some insurance companies act in a manner that abuses good faith.
Bad faith insurance elements differ from state to state. However, every state holds that insurance companies have a legal duty to act in good faith and treat clients fairly when handling their claims. Such fairness is the primary element Washington highlights when defining bad faith insurance practices.
State laws require all insurance companies to continue to preserve the meaning behind and integrity of insurance policies. Primarily, the law means that insurance companies must not deceive the insured, and must be honest and equitable in all decisions. Ultimately, companies must also adhere to what we call the equal consideration rule – insurance companies must not put their own interests ahead of the insured; instead, insurance companies must treat the insured as equals.
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