Elements of Bad
Faith
Bad faith suits will vary depending on the state the case has been brought in. A bad faith suit can be brought against either an insurer by the insured or by a third party that is entitled to recovering from the insured's policy. The claimant will usually allege the insurer improperly handled their insurance claim and either breached its common law duty of good faith and fair dealing or violated a statutorily created duty owed to the claimant. The claimant is able to seek to recover damages beyond contractual damages since the bad faith allegations can extend beyond policy limits provided by an insurance contract.
Bad faith actions have been on the rise, but just because a claim is made or a settlement proposed does not mean the bad faith claim will be successful. There are certain elements of bad faith claims that must be present and proven in order to have a favorable outcome. Inherently, every insurance policy has an implied duty of good faith and fair dealing between the insured to the contract. Good faith is in theory to be present on both sides of the parties, but it has been believed by some that the courts often saw the insurer's position to be of greater weight than the insured.
The idea of a bad faith claim was not fully recognized as a tort until more recent years, but now as bad faith claims are evolving and becoming a relevant tort today, the handling and dealing of the cases is also changing. Acting in good faith is an essential part of ensuring both parties are not taking unfair advantages of the contract to injure the rights and benefits of that contract. Different states have taken different actions in terms of dealing with the growing number of bad faith claims in recent years and the vulnerability insurers and insureds have to acts of bad faith. In some states, rulings to broaden exposure to extra contractual suits against insurers have been taken, while in other states efforts to limit an insurer's exposure to claims has been taken.
The elements of bad faith claims continue to rely on the particular state's system for overseeing insurance companies. Though much more difficult for an insured to bring bad faith suits against insurers in certain states that respond more favorably to the insurance industry, in the absence of federal regulations an insured is advised to contact a reputable and experienced attorney knowledgeable in the complexities of bad faith law. In any event, an insurer knowingly committing or performing to business practices not in good faith are taking advantage of the overall well being of consumers. Insurers have a duty to deal fairly with policyholders and when this covenant has been broken, high losses can be suffered.
If
you would like more information on the elements of bad faith, please contact us to confer with a bad faith lawyer.
