When you are faced with a personal injury case, you likely anticipate fair conduct from the insurance company, expecting them to uphold their policy terms. However, an insurer might exhibit “bad faith.” Understanding the legalities of insurance bad faith practices is vital for those pursuing just compensation for their losses. Please continue reading as we explore what you should know about these matters and how an experienced Prince George’s County Personal Injury Attorney can help ensure you receive fair treatment during the settlement process.
What Constitutes Insurance Bad Faith?
An insurance company can be found to have acted in bad faith if its actions or inactions are deemed unreasonable or without proper cause. It’s important to understand that an implied “covenant of good faith and fair dealing” is inherent in every insurance policy, mandating honest and fair conduct from both the policyholder and the insurer. If an insurance company breaches this covenant, it could face liability for damages exceeding the initial claim value. In a personal injury case, common examples of insurance bad faith include:
- Claim denial without a legitimate reason
- Delayed payments
- Insufficient investigation
- Excessive or unnecessary documentation requests
- Unfair settlement offers
- Misrepresentation of policy terms
- Failure to defend policyholders
- Threatening or coercing the policyholder
- Unreasonable refusal to settle
You should note expect bad faith claims in the context of personal injury law can arise when your insurance company acts in bad faith (first party) or the at-fault party’s insurance company (third-party).
What Legal Remedies are Available?
To establish a bad faith claim, two primary elements must typically be demonstrated: the wrongful withholding of benefits due under an insurance policy, and the unreasonable nature of the insurer’s actions in doing so. Proving that an insurance company acted in bad faith may allow you to recover damages exceeding the original claim’s value. The type of damages available varies between first and third-party claims.
For a first-party claim, damages typically include the policy benefits wrongfully withheld and any additional financial losses incurred directly by the insurer’s bad faith actions. Compensation for pain and suffering may also be sought. In a third-party claim, if the insurer unreasonably failed to settle, you can recover the amount of the judgment exceeding the policy’s limits. If the claim stems from a wrongful failure to defend, the full judgment amount may be recoverable. In both scenarios, the claimant can recover financial losses suffered by the policyholder due to the judgment or excess judgment, and compensation for the policyholder’s emotional distress.
In some cases, the court may award punitive damages in both first and third-party claims. These damages are awarded when a case involves egregious conduct, intended to punish the insurer and discourage similar actions in the future, rather than to compensate for losses.
If you suspect an insurance company is acting in bad faith, please don’t hesitate to contact a determined attorney from McCarthy, Winkelman, & Mester, L.L.P., who can help pursue appropriate legal action to safeguard your interests. Connect with our firm today to learn how we can assist you.
