The Two Types of Bad Faith Insurance Claims You Need to Know
An insurance company engages in bad faith when they do not act in their insured’s best interests. As someone who pays insurance premiums, you expect that your insurance company will have your back when it comes to paying claims that you submit to it. You also expect that they will be reasonable about handling claims brought against you by other people. Unfortunately, that is not always the case.
First-Party Bad Faith Insurance Claims
First-party bad-faith claims arise when an insurance company does not fulfill its obligations to you, as the insured person. As an insured, you are the “first-party” in this type of claim.
Claims that arise in this context might include things like:
- Failure to timely investigate and approve claims
- Denying a claim without an investigation or explanation
- Failing to communicate with you about policy benefits
- Hindering or prolonging settlement negotiations with a third party
Ultimately, if you submit a claim with your insurance company, they have an obligation to investigate it promptly. They must also settle the claim with a third party in a reasonable amount of time.
Because insurance companies have a duty to act in their policyholders’ best interests, they should also help with coverage questions and permit coverage when there are legitimate claims. They should also generally cooperate with policyholders and be honest in their dealings with their insureds.
Third-Party Bad Faith Insurance Claims
Third-party bad faith insurance claims involve someone who is not a policyholder. Instead, the insurance company’s policyholder harmed or injured the third party. The third party then looked to the insurance company for compensation.
Suppose an insurance company fails to settle a claim for a reasonable amount or within a reasonable amount of time. In that case, the insurance company could also be liable for third-party bad faith. However, the third party does not bring this type of claim against the insurance company. Instead, it is still the policyholder that asserts this claim.
If you think your insurance company has been acting in bad faith in its dealings with you, contact our team. We can walk you through your legal rights and help you assert them. Call us today at 405-235-4500 for more information!