Financial institutions and businesses which purchase insurance are entitled to the protection for which they have paid. Sometimes, the pressure to increase profits results in insurance companies making the decision to place the insurance company’s profits ahead of its contractual obligations to protect the businesses it insures.
Every time a claim is denied, an insurance company cannot be said to have acted in bad faith. A claim may be denied for honest reasons, or it may be denied because of a simple mistake. Bad faith occurs only when the delay or denial of benefits is unreasonable, without proper cause, outrageous or malicious.The types of conduct which may be evidence of bad faith include:
- Deliberately misrepresenting pertinent facts or policy provisions relating to coverage;
- Deceptive practices or deliberate misrepresentations to avoid paying claims;
- Using an improper standard to deny a claim;
- Failing to acknowledge and act reasonably promptly;
- Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies;
- Refusing to pay claims without conducting a reasonable investigation;
- Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements are completed;
- Failing to explain applicable policy provisions or exclusions;
- Using abusive or coercive tactics to force a claim settlement;
- Compelling insureds to institute litigation to recover amounts due under an insurance policy.
An insurer found to have acted in bad faith may be liable for damages in excess of the policy limits. The types of damages that can be sought in a bad faith claim vary from state to state, but may include:
- Statutory penalties;
- Statutory interest;
- Attorneys’ fees;
- Emotional distress;
- Economic loss;
- Punitive damages.
When an insurer breaches its contractual duty to act in good faith, it is the policyholder who suffers. To prove bad faith, the insured must meet specific technical requirements; for instance, the insured must clearly communicate a dollar specific proper demand; the insured must tell the insurer that the insured is asserting bad faith; and the insured must allow the insurer a set time period within which to pay the claim.
The attorneys of Wolff Ardis, P.C. have experience in dealing with corporate insurers from the beginning of a claim to insure that the insurer acts in good faith in pursuing claims. Wolff Ardis, P.C. also knows what needs to be done from the initial filing of an insurance claim to make it easier to pursue a bad faith claim if it becomes necessary. The attorneys of Wolff Ardis, P.C. can help guide you through the complex maze of bad faith litigation. Wolff Ardis, P.C. has tried one bad faith claim to a judgment of more than $20 million.Patrick M. Ardis has also served as an expert witness on bad faith – representing both carriers accused of bad faith and policy holders alleging bad faith.
If you believe that your business or financial institution has been wrongfully denied payment on a covered insurance loss, contact the lawyers at Wolff Ardis, P.C. They will take the steps necessary to protect your rights.