What constitutes ‘bad faith’ by an insurer?

On Behalf of | Jun 14, 2018 | Insurance Bad Faith

Most of us pay a substantial amount of money every month for multiple types of insurance to help protect us financially in the event of everything from a health crisis to a car crash to a burst pipe in our home. We expect that in return for paying the designated premiums every month, insurance companies will live up to the terms of our contract with them when we need to file a claim.

That expectation is backed by law. Here in Kentucky, insurers have an obligation to resolve claims promptly and fairly as soon as liability is established. Insurance companies who don’t do this are considered to be acting in “bad faith.”

Bad faith practices are those which are unfair or dishonest. Common examples include:

  • Failure to do a complete investigation of a claim: Sometimes an insurer will deny a claim without talking to all of the relevant parties.
  • Unreasonable delays: Insurers may drag out a claim in the hope that the claimant will stop pursuing it. Insurers have timeframes set by the state for accepting or denying claims.
  • Not paying a valid claim: If the circumstances of your claim are included in your policy (for example, uninsured motorist or flood coverage) and your claim is legitimate, the insurer is obligated to pay it as designated in the policy.
  • Underpaying a claim: If you have a repair quote from a legitimate company, for example, and your coverage provides for payment of that amount, an insurer can’t “lowball” you and pay a lesser amount.

If you believe that an insurance company or one of their representatives is guilty of any of these bad faith actions or other deceptive practices, you may be able to file a bad faith claim against that insurer. We invite you to find out more about our commitment to helping clients whose insurers have acted unfairly and illegally by reviewing our website.