What is a bad faith insurance claim?
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What is a bad faith insurance claim?

| Aug 25, 2020 | Firm News

When you sustain injuries in a motor vehicle accident, someone’s insurance company, either yours or the one covering the driver who caused the accident, must pay your damages. Unfortunately, however, many insurance companies have poor track records of paying claims. 

As FindLaw explains, if the insurance company involved in your motor vehicle accident unreasonably investigates, processes or refuses to pay your claim, you may need to sue it for bad faith. Generally you have two choices: sue under common law or sue under state statute. 

Common law bad faith claims

Common law refers to laws that arise out of a society’s customs and practices or court decisions. Nevertheless, when it comes to making a common law bad faith insurance claim, each state has its own definition of what constitutes bad faith on the part of an insurance company. 

In general, however, you must prove that the company denied you the benefits due under its policy and unreasonably withheld these benefits from you. In California, evidence of bad faith includes the following: 

  • The company misrepresented its policy provisions. 
  • It failed to act promptly after you filed your claim. 
  • It failed to approve or deny your claim within a reasonable amount of time. 
  • It failed to give you a reasonable explanation as to why it denied your claim. 

Statutory bad faith claims

If you choose to go the statutory route, you can sue under either breach of contract or tort law. A tort represents a deliberate wrongful act that causes damage to someone else. In a tortious insurance bad faith lawsuit, you can recover both your economic and noneconomic damages. If the jury determines that the insurance company’s actions were especially egregious, they may award you punitive damages as well.