What is “Insurance Bad Faith”?
Have you filed a claim with your insurance provider only to have them deny coverage, delay processing your claim, or offer you a lowball settlement? If your insurance company took any of these actions in bad faith then you may be able to sue them for insurance bad faith. But what exactly is insurance bad faith? What types of conduct may be done in bad faith? What types of damages are available in insurance bad faith lawsuits? The aim of this article is to answer these questions and to provide a brief introduction to insurance bad faith law.
Insurance Bad Faith
In Mississippi, insurance companies have an obligation to deal fairly and in good faith. This implied duty of good faith and fair dealing prohibits insurance companies from using shifty wording to avoid obligations under their policies or generally refusing to perform when required to do so. The duty of good faith and fair dealing also means that for a first party claim an insurance company is obligated to investigate the alleged damage, determine what is covered under the policyholder’s policy, and pay the proper amount. Therefore, an insurance company that improperly investigates a claim or determines a valuation in bad faith can be sued for insurance bad faith. Additionally, for a second party claim an insurance provider may be required to defend a claim and/or provide indemnification. If the insurance company acts in bad faith and fails to live up to either of these obligations then the wronged policy holder can sue for insurance bad faith.
Conduct that Can Be Done in Bad Faith
An insurance company that violates their duty of good faith and fair dealing can be sued for insurance bad faith, regardless of type of bad faith conduct that they engaged in. In other words, there is not a set list of bad behavior that violates the duty of good faith and fair dealing. However, the list below illustrates common examples of bad faith practices that insurance companies have engaged in throughout the past:
- Denying coverage where coverage is due,
- Unjustifiably canceling a policy,
- Failing to defend the policyholder when the insurance company is obligated to do so,
- Altering a policy without consent or notice,
- Intentionally withholding or misrepresenting policy information,
- Unreasonably delaying investigating or paying a claim, or
- Offering a settlement that is less than what is required under the policy.
Damages Available in Insurance Bad Faith Lawsuits
While each lawsuit is different, a successful insurance bad faith plaintiff will typically recover the benefits that they were guaranteed under their insurance policy plus punitive damages designed to punish the insurance company for acting in bad faith and to deter them from acting in a similar manner in the future. However, be sure to ask your insurance bad faith attorney if any of the following types of damages are also available in your case:
- Statutory penalties,
- Statutory interest,
- Attorney’s fees,
- Emotional distress, and
- Economic loss.
Need Legal Advice?
The attorneys of Derek L. Hall, PLLC are committed to standing up against bad faith insurance practices in Mississippi and would be happy to assist you if you feel that your insurance provider is not treating you fairly. Contact our experienced insurance bad faith attorneys in Jackson today at (601) 202-2222 to discuss your legal options during a free initial consultation.