An insurance company and their insured have a special relationship of utmost good faith. That’s why when a legitimate insurance claim is denied, people are often left frustrated and unable to understand why “their” insurance company would do this to them. Insurance denials can arise in all forms of insurance claims, including long-term disability insurance, life insurance, and critical illness insurance, amongst others.
When an insurance claim is denied in bad faith, it can have significant implications for both the insurance company and the insured. However, understanding what is or isn’t bad faith is not as straightforward as it may seem.
What is Bad Faith?
Insurance companies are required to act in good faith and deal fairly with their policyholders. Bad faith in insurance denial claims is when an insurance company unfairly denies a legitimate claim and does so by acting contrary to their duty to act in good faith. This can occur when an insurer fails to conduct a proper investigation, unreasonably interprets policy terms, or withholds relevant information from the insured.
If an insurance company denies insurance coverage in bad faith, then a lawsuit can be brought against them not just for the monies the insured would be entitled to under their wrongfully denied contract of insurance, but also for monetary damages for the bad faith actions of their insurance company.
From the perspective of an insured policyholder whose rightful claim for insurance benefits has been denied, any and all insurance denials would be made in bad faith. The reality is much more complex than this and in order to have a successful claim for bad faith you will need to have evidence that goes beyond simply being treated unfairly by an insurance company. Bad faith requires conscious wrongdoing or an act of dishonesty for improper purposes on behalf of an insurer. Improper or negligent handling of a claim for coverage under an insurance policy will not rise to this level.
How Can I Tell If I Have A Bad Faith Claim Against My Insurance Company?
There is no one-size-fits-all approach to whether or not there has been bad faith with respect to your claim for insurance coverage. Quite often what might seem to an individual to be a rock-solid bad-faith claim ends up not being so after the matter is reviewed by an experienced insurance denial lawyer. Only once your insurance policy and the handling of your claim have been examined in detail can a lawyer advise you as to the strength of your claim for bad faith.
A recent case out of the Ontario Court of Appeal has given guidance on the type of behaviour on behalf of an insurer that could give rise to a bad faith argument, including:
- Denying coverage or payment of benefits and then asking for additional documentation to support ongoing benefits;
- Relying on opinions from their medical consultants which they knew or ought to have known was incorrect;
- Selectively cherry-picking evidence to support a denial of coverage while ignoring conflicting medical evidence;
- Delaying obtaining independent medical evidence in the face of conflicting medical evidence;
- Misinterpreting evidence to support a denial of benefits
Insurance companies fight bad faith allegations very aggressively as they can result in significant awards against them, as well as bad publicity in the press.
Bad Faith Claims and Timelines
Claims against insurance companies are subject to strict timelines. If you have a bad faith claim against your insurance company contact the experienced insurance denial lawyers at Taylor & Blair LLP today for a free consultation.