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When insurance fails: Bad faith denials

Imagine making monthly payments for an insurance policy for years. You have paid thousands of dollars in an attempt to manage risk. You have a contract that says that in return for regular payments, your insurance will cover you in the event of an accident. In other words, your insurance provider will compensate you for damages.

One day, an accident happens. You need the compensation that your insurance company promised. Instead of receiving a check to cover your damages, your insurance provider sends you a denial letter. They have come up with some convoluted excuse not to pay. This is what is known as a bad faith insurance claim denial. There are steps you can take to counter a denial. An experience Raleigh County injury attorney can help you handle a denial from your insurance provider.

Read further for an overview of concepts and issues that are usually associated with bad faith insurance claim denial cases.

Good faith covenant

An insurance policy is a contract between you and the insurance company. In exchange for monthly premiums, your policy is supposed to provide you with certain protections. As with all contracts, there are certain duties required of each party. These duties include an implied covenant of good faith and fair dealing. This means that each party will deal in an honest and fair manner and not seek to interrupt each other's ability to benefit from the contract.

First-party denials

A first-party bad faith insurance denial happens when the provider refuses to provide you with compensation without giving you a reasonable cause. It also occurs when the insurance fails to properly investigate the claim within a reasonable time period: For example, if you file a claim with your home owner's insurance about storm damage and the insurance company waits months to follow up on the claim. Common tactics include:

  • Ignoring a claim
  • Refusal to pay or underpayment of a valid claim
  • Making false assertions about the situation

Third-party denials

A third-party bad faith insurance denial happens when your insurer does not take the appropriate actions to defend and pay all defense costs when a lawsuit is more than the amount covered by the policy. A third-party bad faith denial can also happen when your insurer refuses to pay a final court judgment or a settlement that the provider should cover.

Don't fall victim to a bad faith denial. You have faithfully paid your insurance premiums and your provider should uphold their end of the contract. If you have received a bad faith denial, contact a local attorney experienced with handling unscrupulous insurers for help settling your claim.

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