Introduction: What is a bad faith lawsuit?
Most US adults have a number of insurance policies. The primary aim of insurance cover is to protect us against hazards, threats, and unexpected incidents and events that cause damage to our properties, our health and our possessions. When you pay a premium every month, you expect to be able to make a claim without any problems. In many cases, it’s possible to claim quickly and easily, but what happens if your insurance provider doesn’t pay in full, they put up barriers, or they reject your claim? If you think the company is acting in bad faith, you may be able to pursue legal action.
Bad faith insurance claims are a type of legal claim made against an insurance provider, which has acted in bad faith and not treated the customer fairly.
Common examples of bad faith practices
There are several reasons why a policyholder may feel like their insurance company has acted in bad faith. Examples include:
- Failing to investigate a claim properly
- Rejecting or denying a claim without a valid reason
- Refusing to pay the policyholder the appropriate amount
- Failing to share critical information with the policyholder
- Failing to offer an appropriate settlement offer in cases where liability is evident
- Failing to act within a reasonable timeframe
- Delaying payment
- Intimidating or threatening the policyholder
What damages can be collected in a bad faith lawsuit?
There are many types of damages that can be collected in a bad-faith lawsuit. Damages tend to fall into three main categories: contractual, extracontractual (also known as compensatory damages) and punitive damages.
Here are examples of the three types of damages awarded in bad faith lawsuits:
Contractual damages
Contractual damages are linked to the value of the claim rejected by the insurance provider. If the claim is approved, interest will be added to the value of the insurance claim.
Extracontractual (compensatory) damages
Extracontractual damages, also known as compensatory damages, are awarded to policyholders who have suffered effects, such as financial losses, poor health or emotional distress due to an insurance company acting in bad faith. Examples include:
- Emotional distress damages: if you experienced emotional upset due to bad faith practices, you might be eligible to claim compensation.
- Loss of income or reduced earnings: if you’ve lost work or your income decreased as a result of the actions of your insurance provider, you could claim for lost wages.
- Medical bills: if you’ve incurred medical bills and costs due to bad faith, you could claim compensation. Some people, for example, may experience deteriorating health because they can’t access the care they need due to issues with their health insurance policies.
- Financial losses: if you’ve lost money or had to borrow money due to the actions of your insurer, it may be possible to recover damages. Borrowing money to pay for the medical care you should have been able to access through your insurance policy is an example of this type of claim.
Punitive damages
Punitive damages, sometimes referred to as exemplary damages, are designed to punish the insurance company and reduce the risks of repeat issues down the line. Punitive damages are usually only awarded in the most serious cases of bad faith.
Filing a bad faith claim: Am I eligible?
If you feel like you have been treated unfairly by your insurance provider, it’s wise to seek legal advice. Insurance companies are obligated to provide customers with high-quality services and act in good faith. If they mistreat clients, they should be held accountable.
Contact the friendly, experienced team at Wells Trumbull if you think you may have a viable claim. We specialize in bad faith claims and have an expert team of attorneys to offer advice and support. Hiring an attorney can help to minimize stress and maximize your chances of making a successful claim.
Conclusion
Bath faith insurance claims are made against insurance providers which treat customers unfairly. There are many examples of bad faith practices and several types of damages awarded in bad faith lawsuits. If you feel that you have been treated unjustly by your insurance company, and you’ve lost money, experienced emotional distress or suffered poor health as a result of the actions of your insurance firm, don’t hesitate to seek legal advice.
Contact Wells Trumbull today to discuss your claim with experienced, knowledgeable, friendly attorneys.