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What is a bad faith insurance claim, and how do you prove it?

On Behalf of | Jun 25, 2024 | Insurance Law, Motor Vehicle Accidents |

People purchase insurance policies to protect themselves from unexpected events. But what happens when your insurance company denies your claim without a valid reason, refuses to make a fair settlement offer to you or refuses to provide you coverage or defend you when a claim is made against you? This could be a case of bad faith. In the unfortunate event that your insurance company does not fulfill its obligations, you may be able to seek compensation for the damages you experienced. Here are some things you need to know to prove a bad-faith insurance claim.

Recognizing bad faith in insurance claims

When you purchase insurance, you trust that your insurance company will fairly fulfill their duties when the need arises. You expect them to process your claim properly and promptly. If your insurance company refuses to settle your claim for a fair amount or denies your claim without just reasons, it could be a sign of bad faith. This could manifest in various ways, including unreasonable delays in processing your claim, failure to investigate your claim thoroughly, offering low settlement or outright denying your claim without a valid reason.

Proving bad faith insurance claim

While you can pursue a bad-faith insurance claim, proving it can be complex. Here are some steps you can take:

  • Keep a record of all interactions with your insurance company, such as emails, letters, phone calls and other forms of communication. These can serve as evidence of the company’s actions or inaction.
  • Thoroughly review your insurance policy to understand what is covered and what is not. If you believe the insurance company is acting in bad faith, highlight the sections of your policy that support your claim.
  • Consult with a legal professional experienced in bad-faith insurance claims. They can help interpret your policy, assess your situation and guide you in the best course of action.

According to the Florida Insurance Code, policyholders must prove two things to establish a bad faith claim: (1) the insurer lacked a reasonable basis for denying the claim, and (2) the insurer knew or should have known that there was no reasonable basis for denying the claim. Florida Statute Section 624.155, provides, in part, that “[a]ny person may bring a civil action against an insurer when such person is damaged [by an insurer] not attempting in good faith to settle claims when, under all the circum-stances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests . . .”.

Legal professionals familiar with these laws can provide valuable assistance in proving your case.

You do not have to face this alone

Recognizing and proving a bad-faith insurance claim can be challenging, but it is crucial for protecting your rights as a policyholder. By understanding the signs of bad faith, documenting everything, understanding your policy and seeking legal advice when needed, you can significantly improve your chances of a successful resolution.