What is Insurance Bad Faith?

When you agree to an insurance policy with an insurance company in North Carolina, you enter into a contract in which the insurance company is required to act in good faith - that is, they are agreeing to properly review your case, promptly come to a good and fair decision, and provide you with payment accordingly. In general, the insurance company must simply act reasonably in good faith.

However, insurance companies lose profits when they have to pay out on claims. It is in their best interests to deny claims, shorthand claims, and delay claims to policyholders. In many cases, insurance companies will deny a number of claims with the understanding that most policyholders accept the denial and do not fight the ruling. When these denials and delays take place despite your reasonable claim, the insurance company is acting in bad faith.

Here are some of the most common instances of North Carolina insurance bad faith:

  • Your insurance company does not promptly investigate your case.
  • Your insurance company does not thoroughly investigate your case.
  • Your insurance company delays your payment.
  • Your insurance company does not promptly communicate with you.
  • Your insurance company does not provide a reasonable explanation of your claim denial.
  • Your insurance company uses unreasonable interpretations of your policy's language.
  • Your insurance company does not reimburse you fully.

What should you do if you think your insurance company has acted in bad faith while processing your claim? There are three options:

  1. Negotiate a resolution with your insurance company (after presenting them with the evidence of your case, including a record of your interactions with the company regarding your case).
  2. Sue the insurance company for your rightful compensation; and give up.
  3. If you would like to pursuer either of the first two options and collect your rightful claim payment, it is advisable to contact a North Carolina insurance dispute lawyer to assist you with your case.