Bad Faith Insurance: Insurance companies are required by law to act in good faith to their policy holders.
This means an insurance company is obligated to willingly pay claims properly and promptly, a compensation settlement equivalent to the damage and outlined in the policy. They cannot look for legal loopholes to deny claims. If they do, it is considered bad faith insurance.
It is important to remember, however, that an insurance company’s primary obligation is to provide a profit to the shareholders of the company. To make certain that the minimal compensation is paid out, adjusters utilize any tactic available to them.
Common reasons for bad faith lawsuit
- Failure to explain why a claim was denied
- Failure to conduct a fair investigation
- Failure to compensate with a fair settlement
- Failure to compensate in an acceptable period of time
There is a very substantial benefit and good economical reason for Insurers to commit bad faith. Insurers receive thousands of claims every day, many of which are wrongfully denied. Very few victims dispute this wrongful denial and thus Insurers save considerable amounts of money, which in reality they would otherwise be obligated to pay. Here’s an example how it works. Let’s say for example that an Insurer denies 100 claims. Of these 100 claims, ninety-five go unchallenged and disappear while five claims are disputed. Of these five, the Insurer reverses its earlier decision to deny coverage and agrees to pay on four of the claims but continues to refuse coverage on the fifth claim. The fifth claimant then files a lawsuit and recovers bad faith and punitive damages against the Insurer. Even if this claimant who filed suit recovers millions of dollars against the Insurer, the insurance company still saved millions of dollars by not having had to pay the other 95 claims which were denied and not disputed. Thus, Insurers gain substantial financial and economic advantage by continuing to deny claims.
Bad faith tactics by insurance companies are widespread. According to FBIC (badfaithinsurance.org), up to 95% of companies act in bad faith. They repeatedly and consistently break the law. Unpaid or underpaid settlements are responsible for the destruction and loss of wealth, assets, businesses, jobs and cause poverty.
Pursuing a bad faith claim against an insurance company is very lengthy. Victims can expect to be involved in litigation for three to ten years. Many people simply do not have the means to do so. Lawyer and various legal fees that will be encounter are extensive. Due to the financial and emotional stress it causes, many people walk away. Insurance companies know this. In fact, they count on it.
I will launch a crowdfunding campaign here at Just Prevail. A portion of all funds raised will be reserved to turn this website into a platform for other survivors of disaster. My goal is to alleviate the strains and hardships suffered by survivors of fire or any other kind of disaster, especially bad faith insurance victims. Victims will be able to share their stories here and fundraise to rebuild their lives. My goal is to see them become Survivors and Just Prevail!