bad faith insurance

What is Bad Faith Insurance?

When you sign up for an insurance policy, you’re probably trying to protect yourself from future liability or just trying to satisfy the requirement that you carry insurance on certain property that you own. Insurance companies are supposed to provide you with a way to protect yourself in case something happens. These companies are supposed to act in good faith when those events occur and you need to use your insurance policy. Unfortunately, insurance companies sometimes act in bad faith. Keep reading to find out what is bad faith insurance and if you have a legitimate bad faith insurance claim.

What Is Bad Faith Insurance?

people negotiating on a claim

Bad faith insurance is when an insurance company uses tactics to avoid contractual obligations it has to policyholders. It doesn’t matter if you have home insurance, car insurance, life insurance, or another policy, bad faith insurance can happen on any policy. Insurance companies owe policyholders duty of good faith, which includes treating them fairly and in good faith. There are several ways an insurance company can act in bad faith:

•Refusing to pay a legitimate claim
•Taking more than a reasonable amount of time to investigate and process a policyholder’s claim
•Misrepresenting a contract’s language to avoid paying a claim
•Failing to disclose limitations and exclusions to a policyholder before purchasing a policy
•Making unreasonable demands to prove a covered loss
•Undervaluing or denying your claim after failing to properly assess property damage
•Denying your claim without providing a satisfactory reason

Not everything is considered bad faith, though. Simple mistakes that were honestly made aren’t enough grounds for bad faith. Sometimes your policy doesn’t cover the damage to your property, or there is a difference of opinion between you and the adjuster of the loss amount. If you think you may have been the victim of bad faith, you should consult with a bad faith insurance lawyer.

What Tennessee Law Says

Every state has different laws when it comes to bad faith insurance. In Tennessee, the insurer has 60 days from when the policyholder makes a demand for payment to pay that claim. Before the 60 days are up, you cannot file for a bad faith insurance lawsuit. You must also have a formal demand for payment. Although there is a lot of litigation when it comes to what exactly is “formal demand,” the best thing to do is to put your intent to file a claim for bad faith if your claim is not appropriately and timely paid in writing and submit it to the insurer. Another stipulation for filing a bad faith lawsuit in Tennessee is the denial of a claim must be in bad faith.

How a Bad Faith Lawyer Can Help

couple meeting with a lawyerLawyers and insurance companies have something in common that everyday people don’t: negotiation. If you believe you have been subjected to bad faith insurance, you should consult with a lawyer. They will be able to listen to the details of your case and help with next steps. Some of those next steps could be to question the company’s decision in writing. You could also have a lawyer read over a lengthy policy contract or contact the insurance company for you. If you’re not sure if bad faith has occurred, one of our lawyers will be able to determine if it has or hasn’t.

Now you know what bad faith insurance is. Do you think you have a bad faith insurance claim? Reach out to one of our bad faith insurance lawyers today to set up a free case review. We will be happy to meet with you and discuss your next options.

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