What consumers should know about bad faith insurance

Many of our readers have a basic understanding of bad faith insurance before having issues with their insurer. They may understand that insurers “should” act in good faith and deal with their customers in a fair and efficient manner.

While these attributes make for good customer satisfaction scores and could foster more business, some insurers address claims as if they would never be held liable for insurance bad faith. For the sake of our readers, this post will focus on the basics of insurance bad faith.

First and foremost, consumers must understand that every insurance contract comes with an implied obligation of good faith and fair dealing. This means that the insurance company will not do anything that would harm the insured’s right to receive the benefit of the agreement. In fulfilling its obligation, an insurer must give due consideration to the interests of its insured before considering its own interests. Essentially, an insurer must take reasonable steps to fulfill the interests of the insured before denying a claim.

But not fulfilling these concerns, or at least not giving due deference to them, is where most insurers find fault. Many will find benign, yet rigid reasons to deny coverage and sometimes their actions will be illegal, not just improper. A skilled lawyer can carefully analyze the situation to determine if the insurer acted unreasonably, or if it acted without proper cause, in depriving coverage. After all, this is the standard by which insurers are judged upon.

If you have additional questions about bad faith insurance, an experienced attorney can advise you.