Bad faith insurance practices can be financially devastating for victims and their families. If you or a loved one were injured in an accident and did not receive compensation because your insurer acted in bad faith, it is important to contact an experienced bad faith insurance attorney who can help you obtain the damages you deserve.
First Party Bad Faith
First party bad faith takes place when an insurer does not settle a policyholder’s claim in a reasonable amount of time or for a reasonable amount. Examples of first party bad faith include:
- Unreasonably denying a claim without providing an explanation;
- Failing to conduct an investigation of the claim;
- Proposing an unreasonably low settlement amount;
- Failing to communicate with a policyholder;
- Prolonging payment;
- Stalling or interfering with settlement negotiations; and
- Failing to disclose a client’s policy limits.
Third Party Bad Faith
While first party bad faith is characterized by the insurer’s misconduct toward its own policyholder, third party bad faith stems from insurance claims made against another person’s insurance company. For instance, when a victim is injured by a third party’s negligence or wrongful act, the at-fault party’s insurer is liable for the costs that the victim suffered as a result of the accident. If a third party’s insurer fails to settle the claim for a reasonable amount or within the appropriate time frame, it can be held liable for third party bad faith insurance practices.
Further examples of bad faith committed by a third party insurer include:
- Undue delay;
- Refusing to defend a lawsuit;
- Unreasonably interpreting an insurance policy;
- Threatening the insured parties;
- Refusing to make a reasonable settlement offer; and
- Inadequately investigating the claim.
Insurance companies have a fiduciary duty to their policyholders, which requires them to act in the best interests of their clients. This means that insurers must:
- Look for ways in which a policyholder can obtain coverage when he or she files a legitimate claim;
- Adjust a claim by denying it or paying it within a reasonable amount of time;
- Cooperate with policyholders;
- Express the specific reason for a denial of coverage by citing the relevant policy provisions; and
- Act with prudence and honesty in their dealings.
Because insurance companies owe fiduciary duties to their policyholders, they are required to refrain from certain actions and to fulfill agreed-upon obligations. A failure to do this can be financially devastating for policyholders and their families, so if you were injured in an accident or sustained property damage due to the fault of another, and were subsequently the victim of an insurance company’s bad faith, it is vital to contact an experienced attorney who can protect your interests. Please contact one of our dedicated bad faith insurance attorneys at the Bennett Law Firm at 405-272-0303.