Auto insurance bad faith occurs when an insurance company fails to comply with the terms of the contract. This could mean that the company refuses to pay on a claim or otherwise behave as required.
Why Bad Faith Behavior Occurs
While you pay an insurance company to protect you if you are involved in an automobile accident, the insurance company hopes never to pay any money for such an accident. If there is any chance that, after a claim is filed for reimbursement or payment, the insurance company can avoid payment or reduce the amount of money it will need to pay on a claim. It is this reasoning that causes bad faith to occur. Any slight fact or other piece of information that an insurance company views as being able to avoid paying money on a claim will be used for that purpose.
Bad faith practices also occur when a company is in dire financial straits and cannot afford to pay on a claim. In this circumstance, the bad faith is in the fact that the insurance company has not invested your money in an investment with a reasonable amount of security and is therefore unable to provide you with your end of the bargain. While in this instance you are left without payment, the bad faith is an indication of much larger issues within the company rather than a mere unwillingness to pay.
What Is Not Bad Faith
Things that an insurance company is not required to do and is not doing are not bad faith. Likewise, refusing to pay the original amount but engaging in negotiations or counter offering is not bad faith. These actions are the companys attempt to conserve its financial resources. To be bad faith the insurance company must be refusing to perform an action it is contractually obligated to perform.
Handling Bad Faith
Proving that your insurance company has acted in bad faith is essential in any negotiations or lawsuit. To show that your company has acted with bad faith, you must identify the clause in the contract that requires the company to pay on your claim, the calculations that were used in deriving the amount of your claim and that the insurance company has not paid on your claim. All of these things can be provide through the contract, documents and other reports and recordings created during the process of your requesting compensation and the company denying your request.
Get Legal Help
If you think that your insurance company is acting in bad faith, contact an attorney to discuss your rights and possible actions to obtain compensation. An attorney will be able to analyze the facts of your case and determine whether the company is acting in bad faith.
