Your business relies on its insurance policies to protect your bottom line and your long-term success. If your insurance company does not uphold their duty to you as a policyholder, though, you could be left paying for costly repairs to your property, damages to your business vehicles and more.
When insurance companies do not offer you the benefits you are due, they may be acting in bad faith, and you have the right to take legal action. In order for your bad faith insurance claim to be successful, however, you must prove two essential things.
1. You should have received benefits, but the insurance company withheld them.
Your insurance company has specific legal obligations to you as a policyholder. These obligations include:
- Acting in good faith
- Investigating your claim properly
- Responding to claims within a reasonable time
- Providing documented reasons for any denied claims
- Paying approved claims within a reasonable time
Unfortunately, not every insurance company upholds these obligations. Some do not respond to claims in a timely manner, some do not fully investigate a claim or some may deny claims for inappropriate reasons.
2. The insurance company did not have proper cause to withhold those benefits.
While you may have taken out an insurance policy to protect yourself and your business, the specifics of your policy may give your insurer reason to withhold benefits. This can include claims that exceed the coverage of a policy, claims where liability is in question or claims that the policyholder did not file within the required timeframe. Because of this, a dispute between a policyholder and insurance provider does not necessarily constitute bad faith.
If your insurance company does not have proper cause, however, you can file a claim against them to receive the benefits you are due. You may also be eligible for damages to offset the harm to your business caused by this denial.