We buy insurance to protect our homes, cars, and even our health, expecting coverage to be there to help recovery when something goes wrong. But if your insurance company wrongfully refuses to approve coverage, they may be violating Georgia law. As a result, the insured may be able to file a bad faith claim against the company for their losses, under certain circumstances.
What Is Bad Faith in Insurance?
All insurance contracts carry an inherent presumption that the company will uphold their policy obligations. This includes that the insurer must settle legitimate claims within the scope of the policy’s coverage. When the insurer fails to do so and that failure is unreasonable, this is known as acting in bad faith. There are two types of bad faith claims:
- First-party claims—when the insurance company refuses to pay or investigate a claim that the insured made for a loss, such as an auto insurance company refusing to address a claim made for vehicle damage in an accident; and
- Third-Party claims—when someone sues an insured, and the insurance company doesn’t adequately defend, indemnify, or settle the claim to protect their insured from a liability judgment.
To avoid acting in bad faith, the insurance company should:
- Act reasonably
- Follow the policy’s terms
- And, if the policyholder is sued, make a good faith effort to settle the suit on their behalf, if reasonable under the circumstances.
If the insurance company fails to do these things, they may be liable for bad faith damages.
What Companies Deny Insurance Claims and Why?
Insurance policies are long, complex, and boring. Because of this, most of us do not pay attention to the fine print until it’s time to make a claim.
In the terms of the policy, there is a grant of coverage (e.g. We will pay any damages as a result of a car accident.). Then there are certain conditions, exclusions, and exceptions from coverage (e.g. We will not pay damages for an intentional act.) When a claim is filed, an insurance company reviews the facts and the policy to determine if there is coverage.
While most insurance companies try to apply the policy terms as they’re written, sometimes, of course, insurance companies mistakenly deny claims that are within the coverage. If this happens, it can lead to bad faith claims. No insurance company is right 100% of the time. This would include, for example, Allstate, Unum, AIG, Conseco, State Farm, United Health, Torchmark, Farmers, WellPoint, and Liberty Mutual.
Seek Legal Help
In the event that an insurance company denies coverage, it is important to have an experienced insurance coverage lawyer review the facts and the policy. The insured may have additional rights that they will not otherwise know about. Likewise, an insurance company when facing a question on coverage, should generally seek the advice of an insurance coverage attorney to advise them. A mistaken denial of coverage can lead to a bad faith claim and serious financial gains for the insured and penalties for the insurer.
Contact Weatherby Law Firm, P.C. Today!
We have experience in insurance coverage, personal injury, wrongful death, catastrophic injury, truck accidents and more. We offer our clients dedicated legal representation. Contact our office via phone at 404-793-0026 or our online contact form.