Other Scenarios

I Haven't Read My Insurance Policy, I'm Not Sure of the Amount or Extent of the Loss I Had, and I'm Not Even Sure If It's Covered. Does this Bar a Claim?

No. Just because you haven't read your policy doesn't mean you can't make a claim. Assuming you have not gone by the time specified in the policy to submit a claim ("ignorance" of which is no excuse), the insurer has an obligation to adjust your claim, even if you do not know the extent of the claim or terms of coverage which might apply. The insurer has an obligation to act in good faith to conduct a proper investigation of your claim, both as to the extent of the loss and as to whether the event is covered under the policy.

If My Employee Benefit Plan Health Insurance Company Wrongfully Denies My Claim for Benefits, Can I Sue the Insurance Company for "Bad Faith" and Get Punitive Damages?

Not if your employee benefit plan is governed by ERISA. The federal ERISA law preempts most state "Bad faith" lawsuits and there are no punitive damages available under ERISA, no matter how oppressive an insurance company's tactics and no matter how frivolous an insurance company's claim denial.

If My Employee Benefit Plan Insurance Company Wrongfully Denies My Claim, What Can I Sue For?

The most that an aggrieved claimant can usually recover in an ERISA lawsuit is the amount of benefits due, interest, costs and a discretionary award of attorney fees. So, even if the claimant's case proceeds all the way to judgment, the most that the insurer can lose is the amount that it would have paid if it had handled the claim properly in the first place, plus perhaps some attorney fees. Since few claimants are willing or able to "go the distance" in fighting their insurance plans, some unscrupulous insurance companies are assured of winning the war, under ERISA, even if they lose a battle here and there. No matter how egregious an insurance company's conduct, ERISA provides it with a virtual license to steal. This absolutely removes any incentive that an insurance company might otherwise have to treat the claimant fairly.

My Spouse Has Separate Coverage and I Am Not Party to That Insurance Contract. Can I Make a Claim of Bad Faith If I Am Damaged Because My Spouse Was Not Paid?

Probably not. The duty of good faith and fair dealing is generally owed by the insurance company to its insured, not third parties. Unless you are the beneficiary of the policy payments (like in the case of a life insurance policy) you generally cannot sue for bad faith.

The Business That I Own and Operate Is the Insured. Does the Insurer Owe Me Any Duty of Good Faith?

Probably so. Where the business entity is the named insured, and you are the owner, partner or executive of the company, you likely are an "additional insured" under the policy to whom the insurer owes an implied contractual obligation of good faith and fair dealing.

After I Filed a Claim, the Insurance Company Offered Me a Settlement. It Looks To Me Like It's a Lot Less Than My Actual Damages. Do I Have To Accept It?

No. You have the right to recover the full value of your loss. While insurers often seek to settle claims for less than their full amount, and no bad faith can be shown if the offer is a reasonable one, if the carrier is offering a settlement that is completely out of line with your actual damages, or is trying to take advantage of your difficult financial situation in order to save itself money, that may be found to be an act of bad faith. Intentional "low-balling" is simply a type of bad faith.

I Injured Somebody in an Auto Accident. The Insurance Company Refused to Settle Within My Policy Limits. The Jury Awarded Damages in Excess of My Policy Limits. Must I Pay the Excess Instead of the Insurance Company?

Not necessarily. Your insurance company owes you a duty of good faith. If you have a policy that has a $100,000 limit, and the injured person has sued you for $1 million but offers to settle for $100,000, the insurance company cannot unreasonably refuse to settle because "it has nothing to lose" (other than attorney fees) by letting it go to trial. If it refuses a reasonable settlement offer within the policy limits, and the verdict is for more than $100,000, in many states the insurance company may be held liable in a bad faith action for all damages you suffer, and possible punitive damages.

Please feel free to give us a call at 1-800-306-6010 or contact us online.

Insurance Disputes FAQs | Insurance Disputes Glossary | Insurance Disputes Resources