What is Bad Faith Insurance?
Insurance policies are legal contracts that outline rights and obligations between insurance companies, or “insurers”, and policyholders (also called “insureds”). When an insurer fails to fulfill its obligations under a policy, a bad faith claim may be pursued by the insured.
On one hand, the insurance company has a right to reject an invalid claim. On the other hand, the policyholder has a right to receive fair payment for legitimate losses according to the terms of the insurance policy. Bad faith insurance law exists to keep these competing interests in balance. Whether you live in Overland Park, Kansas or Kansas City, Missouri, we will be there to guide you through the process.
Insurance companies must fulfill certain duties to their policyholders, such as the duty to investigate every claim and the duty to indemnify, which means paying the claim up to the limit of the policyholder’s coverage. Two forms of insurance bad faith exist: first-party and third-party.
The Difference Between First- and Third-Party Claims
First-party bad faith insurance claims are made by an insured against his or her insurance company. Common examples of first-party bad faith insurance claims include failing to investigate a claim, proposing an unreasonable settlement amount, delaying payment, and failing to communicate with a policyholder.
Third-party bad faith insurance claims involve the insurer, but the opposing party is someone other than the insured. Third-party claims are in relation to liability insurance. For example, when a victim is injured by a third party’s negligence the insurer of the at-fault party would be held liable for the incident.
Insurance companies have a duty to defend and pay costs, even when the majority of lawsuit expenses are often not covered within their policies.
An insurance company may be acting in bad faith if it unreasonably delays, denies, or discounts a claim. This is known as the insurance industry’s “3 D’s” mantra:
- Delay – Insurance companies will sometimes try to delay the claims process by requesting unnecessary information. They delay the process in the hope that the insured party will give up on the claim and learn to live with their losses.
- Deny – Outright denial is the next tactic an insurance adjuster will use. When the insured refuses to gather the unnecessary documents the bad faith insurance company demanded, the adjuster will usually inform the insured they are denying the claim – even when liability is obvious.
- Discount – Finally, if all else fails, the insurance company will try to discount the claim. This tactic usually occurs after the company has tried to delay and deny the claim. The aggressive injury attorneys at Biesterveld & Crook, LLC do not take discounts from bad faith insurance companies.
The bad faith insurance attorneys at Biesterveld & Crook, LLC work tirelessly to recover every cent our clients are owed. We believe injury victims should not have to endure the additional stress caused by a bad faith insurance company. There is already enough stress following an injury incident without an insurance company imposing more on the victim.
If you are the victim of bad faith practices, schedule a free consultation with our firm, Biesterveld & Crook, today by filling out the form below.