Most people purchase insurance and regularly pay premiums so that their insurance provider will cover them in the case of certain losses or events. They pay them a premium regularly in exchange for the policy. The last thing they worry about is dealing with insurance bad faith.
Indeed, you expect the insurance company to behave ethically and treat you fairly in case of any eventuality. Spending hundreds or even thousands of dollars annually on insurance premiums doesn’t guarantee that your insurance company will act in good faith when you need to file a claim. Some insurers don’t always meet their obligations and prioritize making profits.
Do you believe you have been treated unfairly by your insurance company? Then you should consult an experienced Greenwood insurance bad faith attorney as soon as possible. Don’t try to handle a bad faith insurance claim on your own. Contact Ayers, Smithdeal, and Bettis law firm to schedule a free case evaluation.
The Duties of Insurance Companies to Policyholders
Insurers have a variety of responsibilities toward their policyholders that they must uphold or risk being accused of bad faith conduct. These crucial responsibilities include the following.
Duty to Investigate
Insurers are responsible for investigating claims and reporting their findings and an appropriate valuation to their policyholders. Therefore, unreasonable delays might be a sign of bad faith.
Duty to Indemnify
Failure to pay a settlement or judgment made against a policyholder up to the policy limits breaches the insurer’s duty of indemnification and may constitute bad faith.
Duty to Defend
An insurer may have failed to perform their duty to defend if they refused to defend the policyholder against a claim, even if most of the case was not covered by the policy. In most cases, insurers are required to pay for all defense costs even if doing so will put them above their policy limitations.
Duty to Settle Reasonably
In some jurisdictions, insurers also have an obligation to settle claims fairly. If the insurer refuses to settle because they believe they may lessen their liability at trial, they will violate their duty to settle reasonably.
It’s essential to remember that different jurisdictions have varying rules and standards for determining whether or not an insurance company has acted in bad faith.
What Is Insurance Bad Faith?
Bad faith is when a party behaves unfairly or unreasonably. Insurance providers are required by South Carolina law to handle claims ethically, reasonably, and efficiently. When your insurance company denies an insurance claim covered under the terms of your policy, they may be found to have acted in bad faith.
Insurance companies may operate in bad faith in cases involving varying claims, such as motor vehicle accidents, premise liability, and medical malpractice. Some of the most common instances of insurance bad faith include:
- Failing to investigate insurance claims
- Declining to negotiate after a valid claim has been lodged
- Putting off a settlement claim without a reasonable explanation
- Using policy language that is unclear or misleading
- Using biased with an agenda to debunk a claim
- Offering a partial settlement for a claim
- Failing to make a settlement offer in good faith
- Failing to act promptly and within a reasonable timeframe
- Denial of a claim without a written explanation
- The termination of insurance coverage without prior notice to the policyholder.
If an insurance provider commits any of the wrongdoings listed above, it may be considered bad faith and subject to legal action.
Bad faith only applies to first-party insurance contracts, which are claims made by you against your own insurance company. If another insured party’s insurance company denies your claim for compensation because there is no policy in effect between you and the insurer, this is not deemed bad faith.
Causes of Action
You can sue the company for insurance bad faith. However, different jurisdictions have varying laws that determine what you should do. Bad faith insurance claims often proceed as one of the following cases:
Breach of Contract
Victims of an insurer’s bad faith may pursue a breach of contract suit in court. An insurance agreement is a contract where the insured party pays a premium in exchange for the insurer’s promise to pay claims and provide legal representation. So, the insurer’s failure to fulfill its obligations could constitute a breach of contract.
Bad faith from an insurer is recognized as a type of tort in a different jurisdiction. When someone intentionally causes another party harm, they have committed a tort.
There is a significant difference between a breach of contract claim and a torts action claim, and not just because both can result in compensatory damages but because, in some states, the latter can also result in consequential and punitive penalties. Punitive damages can be quite high, often exceeding the policy’s face value.
How a Greenwood Insurance Bad Faith Lawyer Can Help You Seek Justice
If you feel your insurance company has acted in bad faith and caused you damages, you should retain the services of an insurance bad faith lawyer in Greenwood, SC to represent you in court. South Carolina’s two-year statute of limitations means you have until then to file a bad-faith insurance claim against your insurance provider.
To successfully prove must prove the following.
- The defendant owes you a duty of care. Insurance firms are held to responsibility by South Carolina courts regarding their policyholders.
- The defendant breached the duty of care by not acting as a reasonably prudent insurance provider would have.
- The breach of duty must have caused you damages.
- You are legally entitled to damages if the insurance company willfully denied, failed to process, or failed to pay your claim when there was no reasonable basis for doing so.
Insurance bad faith has been determined by South Carolina courts to be a separate tort from breach of an insurance contract. Therefore, a victim of insurance bad faith is entitled to any losses that directly result from the insurer’s bad faith.
These include lost insurance proceeds, legal bills, and even punitive damages in extreme circumstances.
Call Ayers, Smithdeal, and Bettis PC today at (855) 213-4405 to schedule a free case evaluation.