What Does Bad Faith Mean in an Insurance Claim?

Injury & Accident Attorney Serving Nearby Areas of Columbus & Fort Benning, Georgia and Phenix City, Alabama

Posted: April 19, 2021

This content has been reviewed by Gary O. Bruce

Bad faith claims are unique for most personal injury cases, because they are typically made against your own insurance company rather than against someone else.

An insurance contract is like any contract, in that it applies to both parties involved, not just one of them. Policyholders must pay the insurance company a monthly premium, but the insurance company must pay policyholders when they submit a valid claim.

According to the auto insurance industry’s own estimates, the average driver will only get into a wreck once every 18 years. For drivers, that means they could be paying their insurance company for nearly two decades without getting anything back. So once they do put in a claim, they expect the insurance company to do what they agreed to, i.e. to act in good faith (doing what’s in the best interest of the person who bought the insurance policy).

Unfortunately, many victims of car crashes and other accidents discover that their insurance company is instead committed to doing everything possible to avoid paying what the contract or policy says that they have to. And when insurance companies break the terms of a contract, that’s called acting in bad faith.

All insurance companies can be guilty of bad faith claims, whether it’s the provider of your auto insurance, your health insurance, life insurance, disability insurance, or your homeowner or renter’s insurance.

What are Ways Insurance Companies Show “Bad Faith?”

There are many different ways that insurance companies can act in bad faith, and at the Law Offices of Gary Bruce, we’ve just about seen them all.

Some examples include:

  • Unreasonable delays in responding to a claim, investigating a claim, or paying a claim
  • Unreasonable demands on the policyholder
  • Failing to disclose coverage limits and exclusions, or misrepresenting coverage
  • Ignoring evidence
  • Denying a claim without giving any reason why
  • Denying covered services to avoid spending money
  • Threatening the policyholder

However, it can’t simply be assumed that an insurance company is acting or will act in bad faith. They have to be given a provable opportunity to act—for example, an opportunity to settle or resolve a claim, and then fail to do so.

If they truly didn’t have enough time or information to process a claim, it probably isn’t bad faith.

What’s the Difference Between Bad Faith and Negligent Handling of a Claim?

When an insurer is deliberately acting to reduce, deny, or obstruct a claim—in other words, if they are purposefully trying to get out of something they are contractually obligated to do– that is considered acting in bad faith.

However, insurance adjusters are only human, and humans make mistakes. And just because an insurance adjuster is bad at their job doesn’t mean there’s a bad faith claim. It’s actually much more common for the problem to be “negligent handling” of a claim when something goes wrong.

Determining the difference between an insurance claim handled in bad faith and an insurance claim handled negligently can be tricky. In these circumstances, your best option to get the compensation you deserve is to talk to an experienced Georgia personal injury attorney like those at the Law Offices of Gary Bruce.

What Do I Do When an Insurance Company Acts in Bad Faith?

When your insurance company breaks contract, the first thing you should do is contact a lawyer. if an insurance company acts in bad faith, you may be eligible to file a lawsuit to pursue compensation not just for your full damages from your accident, but possibly punitive damages (damages awarded to you that are designed to punish the insurance company) as well.

If you make a claim for coverage in Georgia, whether through your life insurance, homeowners insurance, or even to cover medical expenses through your auto policy after a crash, the failure to pay can result in a claim for damages that also includes attorney’s fees and penalties if the insurance company is notified and given enough time.  

There can even be penalties for low offers for property damage claims for a total loss of a vehicle, if the claim is presented correctly.

Has an insurance company denied your claim without good reason? Contact the Law Offices of Gary Bruce today for a free consultation.

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