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An insurance policy is a contract that requires an insurance company (the insurer) to act in “good faith” toward you (the policyholder or insured). When an insurer refuses benefits to a policyholder who has a legitimate claim, it is considered “bad faith.” However, an insurance policy has a right to deny your claim if your claim does not fall within the scope of the contract you signed.
When an insurance company denies your legitimate claim for a trivial reason, gives you lots of unnecessary paperwork, ignores your doctor, or repeatedly asks for independent doctors to examine you, the insurance carrier is acting in "bad faith."
If you sue your insurance company and win then you will likely receive the benefits you are entitled to under your policy and you may be able to get additional money for losses or damages you've suffered. Some times a person who wins a suit against their insurance company for bad faith denial of their disability policy they will receive damages for the emotional distress they have suffered. The amount of damages you can collect will vary depending on the injury you've suffered, the damages you can prove and the actions of the insurance company. Because this is a relatively complicated area of law, it is probably best to consult an attorney before filing suit against an insurance company.
When you file a claim you will likely have to fill out quite a bit of paperwork. Before you begin you should make sure you have all of your medical records and a copy of your insurance policy. Filling out a form incorrectly or giving incorrect information can result in your claim being denied. If your claim is denied because of faulty paperwork, you are unlikely to win a lawsuit based on the insurance companies "bad faith" denial.
There are many different examples of Insurance Bad Faith, but some famous examples are:
A jury awarded $4.5 million for medical expenses and $116 million in punitive damages to the widow of a deceased stomach cancer patient. She had sued Aetna for denying her husband coverage for cancer treatment that may have prolonged his survival. Aetna was found guilty of placing its own financial interests before the needs of a policyholder.
A Pennsylvania court awarded $12 million to a woman who had lost her leg in a forklift accident after finding the insurer’s practices to be in bad faith.
Provident and Unum
A woman in California had her claim approved, but the insurer was soon taken over by Provident (which later merged with Unum), which reviewed the doctor’s claim and terminated her benefits. She sued the insurer and was awarded past and future benefits, along with $5 million in punitive damages, for a total of $7.6 million.
CUNA Mutual Insurance
A federal jury in Iowa awarded $6.2 million to the estate of a woman who was repeatedly denied disability claims by her insurer, CUNA Mutual Insurance Society.
Paul Revere Life Insurance Company - Unum Provident
In Utah, a Las Vegas man received $50 million after his insurers, Paul Revere Life Insurance Company and its parent company, Unum Provident, were found by the court to have acted in bad faith when they denied his disability claim.
If you have tried to settle a personal injury claim with your insurance company and you feel you are not being offered a fair settlement you should consult with an attorney in your area as soon as possible.
Personal injury attorneys have experience with insurance companies and settling injury claims. They will fight to get you the compensation you deserve.
First, you should review your insurance policy. If after reading your insurance policy you still think the insurance company is acting in bad faith, then you should collect all of your documentation (medical records, insurance policy, any letters sent back and forth) and send a certified letter to the Director of Claims at the insurance company you are part of. You may also want to write a letter to the Commissioner of the Department of Insurance in your state requesting a review of the denial. If you still beileve the insurance company is acting in bad faith, then you might want to consult with an attorney.
The information on this page is meant to provide a general overview of the law. The laws in your state and/or city may deviate significantly from those described here. If you have specific questions related to your situation you should speak with a local attorney.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified bad faith insurance lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact a local bad faith insurance attorney to discuss your specific legal situation.