When an action takes place in accordance to an agreement between two parties, it is considered being an act in good faith. When an action occurs that breaks this agreement, the defaulting party is considered to be acting in bad faith and can be subject to legal action in New York.
Insurance and Bad Faith Actions
When a consumer purchases an insurance policy, they enter into a legal agreement with the providing company. The consumer agrees to pay a certain amount of money each month, called a premium, in exchange for services and insurance provisions on the part of the insurance company. When the insurance company fails to abide by the terms of the agreement, they are failing in their duty and are considered to be acting in bad faith. As a consumer, you may have a legal claim against them.
Current New York State laws are designed to govern the obligations of insurance carriers for consumers here. At times, terms and conditions within an insurance policy are not spelled out in layman’s terms. The court is required to interpret not only what the policy states, but what the plan offers to the policyholder. Courts then thoroughly analyze the insurance policy to ensure the insurance company is not misrepresenting the coverage they provide or that they are unjustly refusing claims.
If an insurance company designs a policy that gives consumers the impression they would be protected in certain circumstances and then refuses to pay the claim when those circumstances arise, the consumer has a valid complaint of a bad faith action. Insurance companies are barred from making claim decisions merely to protect their own interests.
Insurance Bad Faith in New York
Insurance bad faith claims lawsuits in New York City are successful only when the plaintiff is able to prove the insurance company’s conduct constituted a gross disregard of the insured party’s best interest. Insurance bad faith claims can be brought against insurance companies in either a first or third-party liability claim.
First party suits occur when a policyholder brings a claim against an insurance company for the wrongful conduct exhibited by the company. This is often exerted in the when an insurance company is required to handle the adjustments and processing of a consumers insurance claim under any type of insurance policy. In these cases, insurance companies deny all or part of the consumer’s claim. As a result, the consumer sues the insurance provider for both contractual and extra-contractual damages resulting from the denial of coverage.
Third party cases occur when an insurance company fails to protect a consumer against a third-party claim. These insurance bad faith claims often arise from situations where:
- An insurance company refuses to defend a claim brought against a consumer, which arguably fall within the scope of coverage.
- When an insurance company wrongfully refuses to settle a claim brought on a consumer by a third-party company for amounts that are within the policy limits.
Factors in Determining Bad Faith Claims
In New York State, courts use various factors to determine in insurance bad faith claims are valid. Some factors include:
– Whether proper investigations and claim evaluations took place. Insurance companies are required by law to properly investigate the facts and circumstances of each claim they are presented with. Doing so helps determine what the insurance company is liable for and what damages the consumer faced.
– Whether a timely negotiation or failure to negotiate took place. The court will evaluate whether an insurance company negotiated a settlement amount with a consumer in a timely fashion. They will examine if the insurance company received a reasonable demand from the consumer and what amount, if any, the insurance company counter-proposed.
– Inability to foresee a verdict that exceeds the policy limits. If an insurance company adequately and diligently investigates the claim and the surrounding circumstances, they can still be found to have acted in bad faith. It is important for insurance companies to recognize the risks for this.
– Failure to inform the consumer of a settlement negotiation. Insurance companies have a right to conduct settlement negations on behalf of a consumer. However, they need to notify them so the insurance company can request the progress of negations.
– Attempt to obtain a contribution to a settlement from the consumer. The insurance company must communicate with the consumer to settle a claim and can discuss with them what contributions they are willing to pay in a settlement.
– Belief in non-coverage. If an insurance company believes there is no coverage for the consumer under the applicable policy, they cannot be held liable for excessive judgment amounts rendered against the consumer.
– Compare the financial risks. It is important for insurance companies to evaluate the potential for damages and the financial burden each party to the agreement may be exposed to.
– The consumer’s conduct. If the consumer played any major part in delaying or interrupting settlement negotiations, especially by misrepresenting details to their claim, this will be taken into account by the court.
Over 20 Years of Insurance Bad Faith Claim Experience
If you are ever denied a claim by an insurance company, whether it is health insurance, life insurance, home, auto, boat, or any insurance policy coverage, it is crucial for you to act quickly to see if they are acting in bad faith. You may be able to obtain compensation for damages caused by the insurance company’s refusal to cover treatment.
Over the years, we have helped New Yorkers gather evidence to present insurance bad faith claims in court. With our assistance, clients are better able to obtain the maximum compensation they are entitled to for dealing with insurance companies’ neglect.
If you or a loved one is in need of legal assistance in dealing with insurance bad faith claims, contact our team today at (212) 354-6800 for a free case evaluation. You can also submit a questionnaire online for our firm to evaluate and explore what legal options are available for you.