No one wants to face a high-conflict insurance claim. When people need the coverage that they have paid for, they expect the insurance company to cooperate.
Unfortunately, many people must deal with bad faith insurance practices where companies deny valid claims, delay claim payouts, offer low settlements and otherwise fail to uphold their policies in good faith. In scenarios where people must take legal action to settle an insurance claim, the courts may award them additional compensation beyond the value of the claim itself.
What does the law allow?
Bad faith insurance claims can create financial hardship for policyholders. They may need to cover costs out of pocket or may go extended periods waiting for insurance to help them cover medical expenses, pay contractors or address other losses.
In scenarios where people pursue a successful bad faith insurance lawsuit, the courts may add interest to the amount awarded. Reasonable interest helps offset the financial impact of paying out of pocket or incurring interest on financial obligations while resolving a claim.
In scenarios where policyholders can credibly show an intentional disregard for their rights, they may also be able to pursue punitive damages. Punitive damages do not relate to the losses caused by the insurance company’s conduct. Instead, they serve as a punishment for misconduct. As such, proof of intentional bad faith practices or intentional violations of a policyholder’s rights is necessary for policyholders to request punitive damages during bad faith insurance litigation.
Those denied the coverage they need may need to work with a lawyer to assess their circumstances. Filing a bad faith insurance lawsuit can lead to a paid claim and additional compensation in certain circumstances.