Insurance policies and the legal system are two cornerstones of modern civilization. When accidents occur or major disputes arise, they allow such events to be resolved in a streamlined fashion and help to make the injured or aggrieved parties whole again. We deal with all manner of insurance in our lives: health insurance, dental insurance, car insurance, life insurance, homeowner’s insurance, renter’s insurance, mortgage insurance, etc. If you are a professional or run a business, then you may also have errors and omissions insurance and general liability insurance, among others.

An insurance policy is, at its core, a contract. In exchange for your premium payment, your insurance company has a legal duty to cover certain losses. However, in many cases and for many reasons, insurance companies do not hold up their end of the bargain. Some insurance companies make invalid excuses for not paying; undervalue your claim or unreasonably delay payment on a valid claim. This is called insurance bad faith, and policy owners have the right to sue if their insurance company engages in this type of improper behavior.

An insurance bad faith claim can arise when a carrier fails to fulfill its duties to their insured: when it fails to carry out these duties in good faith. For example, if there is a fire in your home (perhaps caused by a faulty toaster), your homeowner’s insurance carrier has an obligation to investigate, evaluate the damages, and pay for the reasonable costs to repair the damages. If the insurance company calculates a completely unrealistic estimate for the repair costs, or ignores the claim entirety, they have acted in bad faith.

Similarly, if a business is sued (for example, if a customer is injured by a falling display at one of its stores, or if one of the toasters it manufactures caused a fire), their insurance carrier owes two basic duties to the company: to defend it from the lawsuit by paying for the legal fees and associated expenses, and ultimately to “indemnify” it by paying for any judgment or settlement of the lawsuit. Bad faith in this context can occur in a variety of ways, for example, if the carrier refuses to defend or fails to properly investigate the claim.

The attorneys at Garcia | Marsalli, LLP are committed to helping policy owners understand what they are entitled to under their insurance contracts and making sure that insurance companies comply with their contractual and legal obligations. If you believe you have been treated unfairly by your insurance company, have improperly had a claim denied or otherwise feel wronged by the behavior of your insurance company, we invite you to contact our office for a no-cost consultation.