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Insurance Bad Faith

An insurer owes a specialized legal duty to its policyholders. The law recognizes that insurance companies must not act in a manner that unreasonably deprives its insured of the benefits of the insurance policy. An insurer is prohibited from refusing to pay a claim without reasonable basis, or refusing to properly and fairly investigate your claim, or making unreasonable demands of its insured. If an insurance company does so, the law recognizes that failure as a “Breach of the Implied Covenant of Good Faith and Fair Dealing.” Put another way, if an insurance provider denies all or part of your claim and fails to provide a valid reason, it is said to be operating in bad faith.

Any of the following could potentially indicate a bad faith claim:

  • An insurer’s unfair or unreasonable settlement offers;
  • Extensive delays or lack of communication;
  • Making unreasonable demands for documentation;
  • Making false or misleading statements about the policy or policyholder’s rights.

How Assignment Can Help

We have many years of experience evaluating the manner and content of insurance companies’ responses to claims. We regularly review insurers’ responses to claims for water damage, fire, mold, storm damage, and other cleanups, and advise restorers and homeowners of their rights. If a restorer or homeowner is being treated unfairly, for whatever reason, we provide a detailed review and recommendation as to whether insurance bad faith has occurred.

For restorers, an Assignment of Benefits (AOB) or Assignment of Insurance Rights (AOR) is a crucial ingredient in the process. In nearly every state, an Assignment allows a restorer to take ownership of a portion of the rights under an insurance policy. As a result, the restorer “steps into the shoes” of the insured. This speeds up the process of documentation and claims evaluation, and allows the restorer to collect payment directly from the insurer. If an insurance bad faith claim is indicated, the Assignment allows the insurers to taking direct legal action to protect its rights. If necessary, we will not hesitate to sue an insurer to protect our clients. By putting an insurance company on notice that the restorer has obtained rights under the insurance contract, an Assignment dramatically improves both the homeowner’s cleanup and repair experience as well as the restorer’s likelihood of being paid in full and on time. For more information about Assignments, check out The Book on the Assignment of Benefits.

A lawsuit for insurance bad faith can potentially recover not just the monetary benefits under the policy (called “compensatory damages”) for the cleanup, contents manipulation, and repairs, but also damages for any wrongdoing. In many jurisdictions, these additional damages can include attorneys’ fees and punitive damages. Many states allow those claims to be assigned. 

Don’t let an insurance company unreasonably deny your claim or underpay on your policy. Contact us for an evaluation of your claim.

See our list of Representative Clientele.