{2:00 minutes to read} The term “bad faith” is used when an insurance company unreasonably denies, delays, terminates, or underpays a claim.
First-party bad faith specifically refers to the contract between you/your business and the insurance company (as opposed to the insurance company paying a claim made against you or your business from a third party).
Examples of first-party bad faith could include your insurance company’s refusal to pay for:
•Homeowner’s claims;
•Business interruption claims;
•Property damage suffered due to water or fire, etc.;
•Long-term disability claims;
•Long-term care claims;
•Life insurance claims; or
•Any other type of claim that is covered under your policy.
If you suspect that your insurance company has acted in bad faith, a skilled attorney will determine whether a bad faith claim exists by examining the manner in which the insurance company handled your claim. Denial, delay, termination or underpayment of a claim, by itself, is not enough to qualify as bad faith.
Bad faith, its remedies, and potential extra-contractual damages vary considerably across the 50 states. If you are able to pursue a bad faith claim in your state, bad faith damages are considered “extra-contractual”—they go beyond whatever you are entitled to under the insurance contract. This includes monetary compensation for:
•Punitive damages;
•Compensatory damages;
•Attorney’s fees; and
•Emotional distress, etc.
It is important for an attorney to evaluate not only whether you can assert a bad faith claim but also what damages you could pursue and what leverage you may have due to your insurance company’s actions. When bad faith does exist, swifter resolution of the contract portion of the claim and/or increased payouts often result, even if your bad faith claim is shaky.
If you have questions regarding bad faith or believe your claim has been handled in a bad faith manner, please contact Schwartz, Conroy & Hack today at 212-608-5445 to discuss.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack
800-745-1755
ESS@schwartzlawpc.com