What Is Insurance Bad Faith?
Posted on Friday, March 1st, 2024 at 9:00 am
When you file a claim for repairing or replacing damaged or stolen property, you trust that your insurance company will hold up its end of your contract. What happens when an insurer acts in bad faith, denying or underpaying valid claims?
When you purchase an insurance policy, you enter into a contract with the insurance carrier, in which it commits to an implied covenant of good faith practices. You pay your policy and only submit valid claims, and in return, the carrier should pay your claims according to the terms of the policy and otherwise act in good faith toward you, the claimant.
If the insurance company acted in bad faith, you have legal options, and our team can help you explore them.
What Constitutes Bad Faith by Insurance Companies?
Each state sets different laws covering what constitutes insurance companies acting in good faith and fair dealing.
Ohio laws cover specific acts that are considered unfair or deceptive practices or otherwise acting in bad faith, including misrepresentation of what the policy covers and engaging in discriminatory practices in any of the contract terms or conditions.
Kentucky also has specific laws covering acts by insurance companies that constitute bad faith, like failure to investigate claims in a reasonable amount of time and an attempt to settle a claim for less than what a reasonable person would believe it to be worth, based on the insurer’s advertising and printed materials or on the application.
A bad faith claim can come from any type of insurance:
- Car and motorcycle
- Medical
- Life insurance, both term and whole-life
- Homeowners and renters
- Umbrella policies
- Pet insurance
- Travel Insurance
If you have a property damage claim, whether through your motor vehicle insurance policy or your homeowner’s policy, that you believe the insurance company has responded to in bad faith, a seasoned insurance bad faith attorney knows how to pursue the policy benefits you paid for.
Examples of Bad Faith Insurance Practices
If you’re getting the run around from your insurance carrier or didn’t get the amount you expected, you may legitimately feel like you were cheated. However, there’s a difference between being disgruntled at the outcome of the claim and an insurance company truly acting in bad faith. You may have grounds for legal action if the insurance company:
- Denied your claim without providing a reason in writing
- Failed to investigate your claim promptly and fully
- Delayed decisions on claims for medical treatment
- Offered less than the claim is worth
- Denied a claim that should be covered
- Misrepresented the language of the policy or misrepresented insurance law
- Delayed claim payments
- Refused the claimant’s reasonable requests for documentation
The insurance carrier could consider anything that prioritizes profits over the policyholder’s or claimant’s valid claim as bad faith in general. In some egregious cases of bad faith, a company representative may make threatening statements or try to intimidate the claimant. This is also bad faith.
What Is a Bad Faith Insurance Claim?
Insurance carriers operating in Ohio and Kentucky have a duty of good faith toward their customers and claimants who are making a claim on a customer’s policy, such as one that would be filed against an auto insurer after a car crash.
A bad faith insurance claim is one where the carrier refuses to pay a valid claim and refuses to provide a reasonable reason for the denial. Policyholders and claimants may be able to appeal the initial claim denial according to the procedure outlined in the policy or set by the insurance company. The process for doing so varies from carrier to carrier and, often, is in the very small print of the policy.
If you’re struggling to file your bad-faith insurance claim, you’re not alone. Insurance policies and law can be confusing.
How to File a Bad Faith Insurance Claim
Ohio claimants who are unable to get a resolution for a denied claim appeal can file a complaint with the Ohio Department of Insurance. You can call a toll-free number and speak with an analyst, who will evaluate your complaint and advise you of the next steps, including the documentation you must submit. Alternatively, you can file a claim online.
In Kentucky, if you cannot get fair treatment from the insurance company, you can file a complaint online with the Kentucky Department of Insurance. For proper claim filing, hire a lawyer specializing in bad faith claims.
Do You Need Help Filing a Bad Faith Insurance Lawsuit?
Lawrence & Associates fights against insurance companies for property damage claims. We can evaluate your bad faith case and advise you of your next options. Call Lawrence & Associates at (513) 351-5997 today. Our team of attorneys offers a free consultation.
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