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The key elements of a bad faith insurance claim

On Behalf of | Oct 25, 2019 | Business and Commercial Litigation

Insurance companies have the responsibility to investigate all claims made by insurance carriers. Many of these claims may not qualify for compensation, however, because they do not fulfill requirements set out in the initial contract. As a result, the insurance company will deny the claim.

Understandably, many insurance carriers may become confused or angry as a result of them having their claim denied. They may believe that the insurance company acted in bad faith and as a result, they may take legal action against them. The following is an overview of the elements that need to be proven in this case.

Showing that benefits were withheld in a valid claim

First, the plaintiff must show that they had a valid claim under the initial terms of the insurance policy. They must also show that the insurance company was explicitly denied by the insurer.

Showing that the reason for the withholding of benefits was unreasonable

Insurance companies should have a reasonable cause to withhold benefits from the insurance claimant if it can be proven that their claim was valid. If the insurance company is found to have lied, engaged in the misrepresentation of facts or failed to decide a claim within a reasonable time frame, this will likely be considered as acting in bad faith.

Insurance companies may need to defend themselves from bad faith claims regularly, especially if claimants become confused about their rights. Good communication and transparent terms can help insurance companies to avoid being involved in costly legal disputes. If your insurance company is facing issues due to bad faith claims, swift action must be taken to resolve the issue.