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Insurance Coverage & Bad Faith

Insurance bad faith refers to a claim in which an insured individual may file against an insurance company due to their unfair dealing or bad acts. In the United States, companies that provide insurance services must operate under good faith and fair dealing in all of the customers they insure. Every insurance contract is mandated to include the implied covenant of good faith and fair dealing. Insurance bad faith can be filed if an insurance company is in violation of the implied covenant of good faith and fair dealing. This includes when an insurance company fails to uphold the terms of the insurance policy, provide coverage, and pay for valid claims that are covered by the terms of the insurance policy. This filing is typically done under a standard breach of contract claim and a tort claim.

There are cases that occur in which an insurance company may fail to uphold and follow its implied duties to the individuals it insures. At times, some insurance companies may engage in deceptive acts in order to maintain their profits. This may include misinterpretation of policy guidelines and terms in order to avoid paying for a claim. Insurers may also make delays to avoid paying a claim, engage in abusive tactics, or fail to conduct an adequate investigation of a claim. 

Typically, bad faith happens in first-party insurance claims. It may also happen in cases of third-party bad faith. Bad faith in relation to first party insurance claims happen when an insurer refuses to pay a claim without investigating a claim in an adequate amount of time and in a thorough manner. This may also occur if an insurer refuses to pay a claim lacking reasonable basis. Bad faith in relation to third-party insurance claims usually involve liability insurance policies. This may occur when an insurer does not follow their duty to pay all defense costs for the insured individual.

If you would like more information regarding insurance coverage bad faith, contact an attorney at RVM LAW, LLC.