Insurance Bad Faith
Insurance bad faith refers to the failure of an insurance company to pay out on a legitimate claim by one of its insured. By entering into a contract with clients, insurance companies are required by law to honor claims for covered services, and if they reject a claim without a valid reason they can be prosecuted.
Types of Insurance Bad Faith
There are several types of bad faith that can be committed by insurance companies. Types of insurance bad faith include:
- Denying a claim
- Failing to investigate a claim
- Delaying payment
- Paying out on only part of a claim
- Wrongly interpreting the language of the policy in order to deny coverage
- Denying all claims when they are first filed
- If the insured does not live up to the insurance contract - by not paying premiums, etc.
- If the claim is not covered, as outlined in the insurance policy
- If the claim is fraudulent
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