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Explaining bad faith insurance claims

Insurance premiums are paid either on a yearly, quarterly or monthly basis for automotive insurance. These payments are made so that in the event that a claim needs to be filed, the policyholder will receive compensation if they have been involved in an accident. There are times though where insurance companies refuse to defend their clients against others making claims against them or they fail to pay claims filed by their clients. This is known as operating in bad faith.

A failure to investigate a claim filed by a client means that the insurance company is operating in bad faith. Any delays to investigate said claim can also be viewed as bad faith. If the insurance company conducts the investigation, but fails to provide the client with the findings, this is also bad faith on the part of the insurer.

Insurance companies have a duty to their clients to defend them against claims. Failing to defend clients, even if the majority of a lawsuit is not covered by the client's policy, is considered bad faith.

Bad faith also occurs on the part of insurance companies when they fail to pay a settlement ordered against their client up to the policy limits. This is called failing to meet a duty of indemnification.

Some areas also have a duty to settle reasonably for insurance companies. This is when an insurance company should help their client reach a reasonable settlement because they could possibly be exposed by going to court. When an insurance company fails to settle reasonably, this is viewed as a bad faith practice.

If an insurance company has committed any act of bad faith, it can be sued for either breach of contract or tort. There are some cases where the claim against an insurance company for bad faith includes both tort and breach of contract.

Visit our site today to learn more about bad faith insurance claims and how a no fault insurance attorney in Rochester, Michigan, can help your case.

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