Bad faith insurance: Dealing with a rogue insurer

You may have been paying your insurance premiums without fail, only for the insurer to dodge your claim when the insured risk occurs. It can be unfortunate when this happens, especially if you have suffered heavy losses.

When an insurer acts in bad faith, you can take legal action against them. As a result, you may be awarded damages, not just for the value of your claim but also for the emotional distress you suffered.

What actions amount to bad faith?

An insurer cannot be said to have acted in bad faith simply because they denied your claim. It can only be considered bad faith on the insurer’s part if they act unreasonably and without justification to deny or delay settling a valid claim under the policy.

Some actions that may constitute bad faith include:

  • Failure to promptly investigate a claim
  • Denying a claim without explanation or valid reasons
  • Misrepresenting facts about the policy
  • Deliberately delaying the claims process, among others

All these can form the basis of a lawsuit against the insurer.

How do you prove bad faith?

Two things must be established when proving that an insurer acted in bad faith. First, the insurer has withheld benefits provided for in your cover, and second, their decision to deny your benefits lacks merit as per the policy terms. Having detailed financial records that back your claims and any communication exchanged with the insurer is crucial.

Most importantly, you need to understand your policy’s fine details – they can make all the difference. Doing so will ensure you are well aware of the contractual obligations of all the parties and help you protect your interests against the insurer acting in bad faith.

 

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