Dealing with insurance companies after a motor vehicle accident can be difficult and frustrating. If you have a valid reason to believe that an insurance company is not negotiating your claim in good faith, you may be entitled to take legal action against it.
There are many ways that insurance companies can show bad faith in their dealings with consumers. Legally defined, bad faith occurs when an insurance provider does not properly compensate a client for a legitimate claim. When a contract exists, the company has a legal obligation to honor claims as stipulated in the contract, and failure to do so is illegal.
Prior to 2008, New York state law protected insurance carriers from having to pay extra-contractual damages in lawsuits brought by clients. Then the Court of Appeals ruled that insured parties were legally permitted to sue for significant damages from their insurance company for neglecting to show good faith and fair dealing. These penalties are separate from the damages payable for failing to honor a legitimate claim.
Examples of insurance bad faith
The most common act of insurance bad faith occurs when an insurer fails or refuses to settle a valid claim within the policy limits without a given reason. This is often seen with life insurance, disability insurance, homeowner and car accident claims. Other examples include:
- Offering a substandard value compared to the loss. â€œLow-ballâ€ offers are not unusual during the claim negotiation process, but if an insurance company refuses to go higher, it may be acting in bad faith.
- Intentionally withholding information about benefits. Insurers should always comply with reasonable requests for benefits documentation from clients and third parties.
- Only paying a portion of the amount owed. An insurance carrier must pay everything owed: anything less is in bad faith.
- Delaying payment of the claim. Insurance companies are required to approve or deny an insurance claim within a specified period of time.
- Neglecting to investigate a legitimate claim. Failing to carry out a fair and objective investigation of your insurance claim fairly is unreasonable and in bad faith.
- Ignoring repeated requests for a claim to be filed.
- Deliberately reinterpreting the terms of a contract to deny a claim or reduce the amount owed
- Using medical information for unlawful purposes
If you have been injured in a motor vehicle accident and believe that your rights have been compromised by bad faith insurance policies, then see a New York personal injury attorney immediately. Contract law and insurance law can be both complicated and challenging to deal with, especially when you are coping with the after-effects of the accident. Your attorney will help you hold the insurance company responsible for negligent claims handling and unfair conduct and get you the compensation you are entitled to.