Why do you pay into your insurance policy? You know that, in your time of need, the insurance company will help you if you experience an accident and are left in a terrible position of medical bills, income loss, and other financial turmoil. Your insurance company is being paid to work on your side. But what happens when the company refuses to pay or properly defend you? They could be operating in something known as “bad faith” which could have a major effect on your life.
The Duties of Your Insurance Company
Every insurance company has duties that it owes to their policyholders. These include the following:
- A duty to investigate: Insurers are supposed to conduct investigations into your claim. If they refuse to do so, or there are unreasonable delays that keep you waiting for the compensation you deserve, then they have failed this duty.
- A duty to indemnify: If an agreement was entered against you, the insurer must agree to pay the settlement money. They could be acting in bad faith if they do not meet these criteria.
- A duty to defend: An insurer is always supposed to defend you in your time of need, especially when a claim is hanging between you and a party.
- A duty to settle reasonably: Insurers sometimes refuse to settle because they hope to reduce their liability during the trial. They may act in bad faith in doing so if they fail to settle reasonably with you or another party.
Here are some examples of cases that have occurred in the past, where bad faith insurance was prominent:
Boicourt v. Amex Assurance Co.: A young boy was injured in a vehicle accident and the insurance company initially refused to disclose its policy limits, which were only $100,000 in coverage. Because of their failure to disclose, the boy and his parents ended up with an award of $2,006,000.
Matson Terminals v. Home Insurance Co.: A policy exclusion led to an insurance company denying coverage for a $10 million earthquake claim. As a result, the settlement was over $33 million, some of which was compensatory damages and some of which was punitive damages.
David Clayton v. United Services Automobile Association: A $3.9 million award was granted to parents whose child was killed in an auto accident. The insurance company only offered $10,000 to the parents when they had a $300,000 policy limit.
Filing a Claim
You may be able to bring a lawsuit if an insurance company has acted in bad faith. If a company breached its duty to you, then they have acted in bad faith and it could become the center of a common-law tort claim. If your insurer is found to have acted in bad faith, they could be held liable for damages in excess of the policy limits, as seen in some of the prior examples. This means that you could receive interest, emotional distress, punitive damages, and so much more for your claim. If you believe that your insurance company has acted in bad faith, you may have a claim against them. At the Leiva Law Firm, we have experience with bad faith insurance cases and want to help you today. Give us a call as soon as possible to get started at 818-519-4465.
Sources:
https://law.freeadvice.com/insurance_law/insurers_bad_faith/bad-faith-insurance-lawsuits.htm
https://www.justia.com/injury/insurance-bad-faith/
