Posted by Andrew on August 19, 2019
No legitimate insurance adjuster sets out to commit misconduct that could constitute bad faith. However, the expenses associated with bad faith lawsuits and the upswing in legal action are strong indicators that insurers need to reconsider the economic implications of bad faith for their company. Knowing what constitutes bad faith and how to avoid it can save legal headaches and a significant amount of money.
Every state has its own set of laws governing the minutia of bad faith lawsuits. However, the majority of states define bad faith as a combination of negligence and deliberate misconduct. Most states determine if negligence occurred using a simple and objective analysis to determine if the insurance provider behaved in a way that was unreasonable toward the customer.
The second element of bad faith is establishing whether the company behaved unreasonably on purpose. It’s important to note that negligence alone is not enough to establish bad faith. Accidents happen and employees can make mistakes unwittingly.
The following are examples of behaviors that can result in bad faith lawsuits. Insurance providers need to take all possible steps to ensure these behaviors do not occur to avoid costly litigation:
Again, none of the above can constitute bath faith on their own basis without the insurer intentionally doing so. However, the behaviors are enough to initiate a lawsuit regardless, and it’s better to avoid going to court whenever possible.
Acting in good faith should be a guiding principle for all insurers and having a solid claims management system in place can help achieve that goal. Contact the experts at Actec to learn how we can simplify and improve your claims management processes.