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Understanding a bad faith insurance claim

Bad faith insurance claims can affect all kinds of claimants. Whether you were injured in an auto collision or your home was damaged in a storm, you could make a claim against your insurance and find that you were unfairly denied the benefits that you deserve.

You have paid your insurance premiums in the hopes of having the benefits you’d need if you were ever hurt or your property ever sustained damage. Now, your insurer is trying to say that your claim isn’t going to be approved and won’t be payable.

What is a bad-faith claim in insurance?

When you make a claim, it’s expected that the insurance company will pay you in accordance with the contract you have with them. The insurance policy likely has requirements that you have to meet to receive your benefits. For example, if you have flood insurance that says it will cover any damage costing you more than $500 to repair, then your coverage should kick in at that point. If the insurance company denies the claim by stating that they won’t cover flooding from a hurricane or from a ruptured water heater, then they could be violating their contract with you.

It’s not always easy to know if an insurance company is arbitrarily denying your claim, because the language in an insurance policy won’t always be plain or easy to understand. At the same time, what the agent told you when you signed up for the plan does matter. If they are now going back on the offers they made, then you may have a claim against the insurance company for misleading you and for denying a valid claim.

What should you do if your insurance claim is denied?

If your insurance claim is denied in bad faith, it’s worth taking a look at your legal options. You may be able to negotiate with the insurance company if it realizes that you’re willing to go the distance and take them to court if necessary. Get to know your rights, so that you can be prepared to fight for the benefits and payouts that you deserve.