The attorneys at Albert G. Stoll, A Law Corporation, deal with insurance companies on a regular basis as part of our personal injury and wrongful death practice in the San Francisco Bay Area. Bad faith actions on the part of the insurance company can range from unreasonably delaying the processing of a claim or refusing to defend an insured, to denying benefits or even canceling a policy altogether. When the insurance company acts unreasonably, our experienced attorneys are there to hold them accountable, and ensure our clients receive the benefits promised when they purchased the policy.
When we buy insurance, we think its purpose is to pay our expenses when we are injured, or when others are injured in the case of liability insurance. However, from a business perspective the job of the insurance company is to pay as little as possible on a claim, denying the claim altogether if possible. This is the why legal representation can prove helpful in dealing with an insurance company. While negotiating a settlement is a common practice in the industry, an insurance company cannot unlawfully or unreasonably withhold payment of benefits.
Every contract, including an insurance policy, includes an implied covenant of good faith and fair dealing. Breach of this covenant can give rise to a civil tort action, and the aggrieved policyholder should be able to recover for the direct economic harm suffered as well as non-economic losses such as pain and suffering and emotional distress. In some cases, attorneys’ fees and punitive damages may also be available.
Whether a denial of benefits is unreasonable is determined by examining the customary course of business in the industry as well as the company’s intent. If the insurance company was merely mistaken, they may be liable for breach of contract. But if their actions were deliberate and unreasonable, then they may be liable for a claim of bad faith insurance.
Another way insurance companies avoid paying benefits is by rescinding the policy. In this case, the insurance company combs over the original policy application and conducts an investigation to determine if it can claim that the policyholder misrepresented itself on the application, in which case the insurance company may be entitled to rescission. This practice needs to be examined closely to see if the insurance company is acting in good faith and if there truly was a misrepresentation that could justify rescission.
Failing to properly investigate a claim, or causing an undue delay in processing a claim, can also be grounds for a claim of bad faith. Deliberately low-balling a settlement offer or benefit payment may also be in bad faith if the offer is unreasonable in light of the actual damages caused and the policy limits in place. Bad faith claims can also arise in the third-party insurance context. Most insurance policies contain a duty to defend the insured in lawsuits brought by third parties, such as in an automobile accident. A similar duty recognized in some states is a duty to accept a reasonable settlement demand from a third party; in some instances, failure to do so could also give rise to a claim of bad faith insurance.
If you believe an insurance company is acting unreasonably in its dealings with you, contact Albert G. Stoll, A Law Corporation today to discuss the matter with one of our experienced attorneys.