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People who have been paying their insurance premiums faithfully year after year may be surprised to find a health or accident claim denied in bad faith by the company. If you're like most individuals, the terms of your policy coverage may not be fresh in your mind. If you've never had a problem before, you may not know much about the laws governing indemnification in your state. Sometimes recent or pending legislation has a bearing on claims approval and denial.
Your insurance policy fulfills two functions: It is a list of services that the insurer will provide and the conditions under which they will be performed. It is also a legally binding contract that holds both parties accountable. When all runs according to your plan and payments are up to date, good faith prevails.
When either party fails to uphold its duties, breach of contract and, in some instances, bad faith legal claims are valid.
Take a few moments to learn and understand the distinction between good and bad faith insurance practices in covering:
Other types of coverage may be subject to implied good faith laws in your state.
When a Company Acts in Good Faith
State laws dictate that an implied promise of good faith and fairness accompanies the right to profit from indemnification and defense, or insurance. Personal and property coverage is not a durable good or active service that can be easily gauged for quality and integrity. So a prerequisite for doing that kind of business, which can ultimately have a great impact on lives and livelihoods, is "good faith." This adds a measure of trust to a potentially risky agreement.
Bad faith can include denial, delay in paying, underpayment, unreasonable interpretation of and failure to adequately investigate a covered insurance claim. Consulting with a bad faith insurance attorney can help you decide where your relationship with your insurance company stands. To get connected to a lawyer in your area who can advise you on how to proceed with a legal case against an insurance company, complete our short survey.
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