Insurance Law Questions

When is my Insurance Company committing “bad faith”?

Insurance companies are required by law to act in “good faith” – meaning they must reasonably resolve claims made by or against their policyholders seeking reimbursement for injury or loss suffered under the policy. This means that the insurer should cover you for financial losses (auto, Insurance claimhome, medical, health, life) according to the terms of your insurance policy. After all, you have paid premiums for many years.  When an insurance company denies your claim for no good reason, offers you an unfair settlement, or delays the processing of your claim for a significant amount of time, they may be acting in bad faith.

Bad faith happens more often than people realize. In the interest of protecting their bottom line and saving money, insurance companies often use any excuse at their disposal to deny or delay your processing your claim or to pay you less than your claim is actually worth. They know you may be desperate. Many people simply get discouraged by this stonewalling and give up trying to obtain the benefits they are owed. The insurance companies count on that and have the resources to drag things out and delay.

Does an insurance company ever have a right to deny my claim?

Yes. If you have not provided full information or disclosure on your insurance application, breached your end of the insurance contract, not cooperated with the company in providing information in support of your claim, or if the type of loss is not covered by your policy, your insurance company can deny your claim in good faith. Bad faith conduct only occurs when the insurer’s conduct is unreasonable or egregious and there is no real or reasonable basis for denying your claim.

Should I accept my insurance company’s settlement offer?

If your insurance company has intentionally offered a settlement that is far lower than what you deserve (often called “low-balling”), this is a form of bad faith. Many people accept these settlements without realizing what their injury claim or other loss is really worth or because they are desperate for help. For example, the settlement may cover your current medical bills, but provide you with no way to pay for the long-term care and therapy that your injury requires.

Your insurer is hoping you will accept a low settlement so it can resolve your claim by paying as little money as possible. Even though it claims you are in good hands and it is right there beside you, in many cases this is a slogan not a promise. Before you accept any kind of settlement from your insurance company, make sure you consult with an experienced insurance lawyer to find out the true value of your injury or property claim. Do not rely on their estimates without getting a second independent opinion.

What damages can I recover if I sue my insurance company for bad faith?

If your insurer has wrongfully denied your claim or acted in bad faith, you may be eligible to recover damages for:

  • The full amount of compensation that your claim is worth
  • Interest on the claim
  • Attorney fees

In certain rare cases where the insurance company has exhibited gross misconduct, it may also be possible to receive punitive damages.

What should I do if my insurance company is delaying my claim or not honoring my policy?

If you believe your insurance company is acting in bad faith, document everything in writing – including the claim you submitted, the insurance company’s denial, and any statements, estimates, bills and documents that were exchanged. Also write down the name of your insurance adjuster and the name of their supervisor. Then, compose a formal complaint letter for the adjuster and copy their supervisor when you send it. If this letter fails to move things along, it’s time to consult with an experienced insurance lawyer about pursuing a bad faith insurance case.

Attorney Stuart L. Plotnick was an insurance defense attorney for many years before dedicating his practice to personal injury victims. This experience has given him valuable insight into the tactics that insurance companies use to deny, delay, or low-ball claims. If your insurance company is giving you the runaround, we can help you hold them accountable.

If you have further insurance law questions, please contact the Law Offices of Stuart L. Plotnick, LLC today to schedule a free case evaluation with one of our Maryland insurance attorneys.

We represent accident victims, injury victims and victims of bad faith insurance throughout Maryland, Virginia, and Washington D.C. This includes but is not limited to Bethesda, Chevy Chase, Rockville, Silver Spring, Wheaton, the District of Columbia, Arlington, Alexandria, Leesburg, Fairfax, Reston, Herndon and McLean, Virginia.