What Is Bad Faith Insurance?

As a policyholder, you pay insurance premiums expecting that your insurance company will come through when you need them.

But sometimes, that doesn’t happen. Sometimes insurance companies do this intentionally. They create a contract without a way to fulfill it or the intent to do so.

That’s called bad-faith insurance or insurance in bad faith.

How to identify bad faith insurance

Often times with bad faith insurance, an insurer will delay the investigation of a policyholder’s claim without fully revealing the reasoning of their motives.

As a result, by not honoring the conditions of an insurance policy, the insurer is acting in bad faith.

Some of the indications that an insurer is acting in bad faith may be when there is a:

  • Refusal to pay a claim without fully investigating it
  • Failure to settle a claim when it is clear who is liable for it
  • Failure to respond to a demand within a specified time limit
  • Failure to either deny or pay a claim within a reasonable time period
  • Failure to convey important information to the claimant
  • Unjustifiably denying a person coverage

Types of Bad Faith Insurance

In Florida, there are two types of bad faith insurance: First-party and Third-party.

First-party and third-party bad faith insurance both cover damages and losses for a person who is insured. However, there are important differences between the two.

The major distinctions are:

  • First-party insurance bad faith claims involve an insurer’s refusal to pay a claim without proper investigation.
  • Third-party insurance bad faith claims involve liability insurance.

The second point of distinction between the two bad faith insurances is the insurance policies themselves. This can be another important detail in determining how your insurance policy may have been mishandled or misinterpreted by an insurance company.

First-party insurance claims cover:

  • Bonds and sureties
  • Causalities resulting from property damage after fires or natural disasters
  • Disability, health, and life insurance
  • Title insurance

On the other hand, third-party bad faith insurance coverage covers:

  • Directors and officer’s liability
  • Employment practices liability
  • General liability
  • Professional liability
  • Workers compensation

What to do if your policy is affected

If your insurance company is acting in bad faith, it’s important to know what your options are. Legal action against the insurance company that denied your claim is one option.

There are laws and Florida statutes protecting you from wrongful termination of your insurance claim. As a policyholder, there are also several methods to consider if your insurance policy may have been done in bad faith.

It is advised that you look for evidence in support of your argument – that the insurance company denied your claim – without a prompt reason or proper explanation. Insurance companies are obligated to inform you why they did not cover your entire claim.

 Who to contact if your claim is in bad faith

Before taking any action with your bad faith insurance claim, it is important to have attorneys who can represent you during every step of the process.

If you suspect that your insurance policy may be acting in bad faith, it is important to contact attorneys who can help you get the compensation that you deserve.

The bad faith attorneys at Heintz and Becker can help you if you believe that your insurance was in bad faith.

If you believe your insurance is acting in bad faith, contact us online or call us at (941) 748-2916 to schedule a free consultation.