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What is a bad faith insurance claim?

When you purchase an insurance policy, you buy protection and peace of mind. Insurance helps cover your losses and shields you from personal liability within policy limits. Whether the law requires it or not, having insurance is wise. However, what happens when your insurer does not hold up their end of the bargain? This is where the concept of a bad faith insurance claim comes into play.

Understanding bad faith insurance claims

A bad faith insurance claim occurs when an insurer does not act fairly or appropriately in processing a claim. If an insurer engages in bad faith, you can recover compensation for the damages you suffer. Sometimes, you can also seek additional compensation to punish the insurer for its unfair behavior.

To successfully file a bad faith insurance claim, you must show that the insurer managed your covered claim improperly. The insurer must have unreasonably denied the coverage you deserve.

This goes beyond simply making a mistake in denying a claim. Before filing a bad faith lawsuit, check your insurance policy to see if the insurer violated the contract. Ensure your claim falls under the terms of your contract.

Proving a bad faith insurance claim

As the claimant, you need to prove the validity of your claim. Gather all relevant documents and evidence such as photos, reports, receipts, and correspondence with the insurance company. Maintain a log detailing all calls or meetings with the insurer. If the insurer denies your claim, request that a supervisor review the denial.

Before filing a lawsuit, you may need to show that you attempted to settle your claim. Send a written demand letter detailing your claim. If the insurer does not respond within the required time, proceed with filing a bad faith claim.

File a lawsuit

Filing a bad faith lawsuit is complex. Decide whether to file in state or federal court and include additional claims such as fraud, breach of contract, and negligence. An insurance lawyer can provide the needed guidance to navigate this process.

While insurance is meant to provide security and tranquility, insurers do not always act in good faith. If you suspect your insurer is engaging in bad faith practices, knowing your rights and the steps to take can help you recover the compensation you deserve.

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