Typical ways an insurer commits an act of bad faith insurance

Bad faith insurance seems like a complicated legal topic, but conceptually it is very simple. Bad faith insurance occurs when an insurance companies fails to act in accordance with the laws to which they are bound and when they fail to uphold their clients needs under the implied covenant of good faith. More simply, bad faith insurance just means that an insurance company didn’t follow through on the promises they made in your policy, or they acted in an illegal manner.

Based on this, what are some examples of actions or behaviors that constitute bad faith insurance on the part of the insurer? One classic example is that the insurer fails to follow proper protocol for an individual’s claim. Perhaps they didn’t fully investigate your claim, or they denied your claim without telling you why they came to that decision.

An insurer can also commit bad faith insurance when they pay out a claim. If they delay payments and don’t provide an explanation for why this delay occurred, that can constitute bad faith insurance. If they pay you less than the policy dictates or if they outright deny you payment for a legitimate claim, then the insurer has, again, committed bad faith insurance.

Bad faith insurance also occurs when an insurer does something plainly illegal. For example, if they refuse to take documentation from you in support of a legitimate insurance claim, or if they use threatening language with you in an attempt to dissuade you from filing a claim, then they have run afoul of the law and have committed an act of bad faith insurance.