The terms “good faith” and “bad faith” are often used to describe dealings with insurance companies, but what exactly do these terms mean? Understanding and being able to prove bad faith can be an important part of resolving an insurance claim, if an insurance company has wrongfully denied your claim or otherwise acted unethically.
What is good faith?
In Florida, as with the rest of the country, insurance companies are required by law to act ethically and in good faith when dealing with insured customers. “Good faith” means the insurance company must be honest and fair and use its best efforts in evaluating each insurance claim to determine the proper course of action according to the applicable policy. It’s important to remember that an insurance policy is a binding legal contract between the insurer and the insured, which must be followed to the full extent possible.
What is bad faith?
The term “bad faith” refers to when an insurance company delays, withholds or denies benefits or payments for legitimate insurance claims that are filed under current, valid insurance policies.
Delays can occur when an insurance company drags its feet on approving or denying benefits. Delays can also occur if an insurance approves a claim, but fails to pay within a reasonable time period. As an insurance policy holder, you are entitled to a prompt decision on a claim. It is illegal for an insurance company to require you to supply unreasonable documentation or use other tactics to stall a claim or engage in other tactics such as wrongfully refusing to act or ignoring the claim.
If an insurance company denies a claim, it must provide the policy holder with an explanation for the denial, along with proof of the policy provision that supports the denial.
What to do if your insurance company acts in bad faith
If you believe an insurance company is acting in bad faith, there are a few courses of action available to you. Your response may depend on whether you’re negotiating with your own insurance company through which you hold a policy, or with a third-party insurance company, such as if you were involved in a car accident and are dealing with the at-fault driver’s insurance carrier.
It can be difficult to prove that a third-party insurance company has acted in bad faith — typically, the insurance adjuster for the third-party company would have to be engaging in fraud or outright lies, or preventing you from pursuing the claim through actions such as withholding evidence or tampering a witness. In this case, it’s in your best interests to contact an experienced insurance claims attorney.
If you’re negotiating with your own insurance company, called first-party insurance, keep in mind that it is not “bad faith” when you and the adjuster disagree on the amount of the claim. However, if your insurance company is offering a claim that you believe is too low or is delaying, withholding, or wrongfully denying your claim, you can take action.
Often, simply mentioning the term “bad faith” can motivate an adjuster to make or increase a claim offer. However, if the response is not satisfactory, even after you have placed an accusation of bad faith in writing, you should consider consulting a bad faith insurance lawyer about your situation. An attorney will assess your situation and will help you get the compensation you are owed. In some circumstances, an attorney may be able to recover compensation in addition to what you are owed.
The Miami trial lawyers at Baron, Herskowitz, and Cohen have successfully represented clients struggling with bad faith insurance claims. We advocate on behalf of our clients and help them get through what can be an exhausting and time consuming battle. To learn more, contact us today.