Insurance Bad Faith

Insurance bad faith

Insurance Bad Faith is a tort claim that an insurance policyholder may have against an insurance company for unfairly refusing to pay on claims. An insurance company owes a duty of good faith and fair dealing to any and all people and entities it insures, which exists whether your insurance policy states it or not (they almost never do). If an insurance company breaches its duty to an insured person, the policyholder may have a claim for breach of contract and a tort claim for a failure to live up to their duty of good faith and fair dealing.

In a traditional breach of contract case, the law attempts to give the non-breaching party the benefit of the bargain that they struck or damages for the reasonable expectations they had for the performance of the breaching party. If an insurance plaintiff was limited to expectation damages, there would be an incentive for an insurance company to deny ALL claims, knowing that the worst that could happen would be that it would be required to pay what they promised to begin with!

To avoid this, Insurance Bad Faith litigation exists. Insurance Bad Faith is designed to dissuade insurance companies from refusing to pay on meritorious claims and treating their paying customers unfairly by imposing penalties that extend past the terms of the contract. The New Mexico Insurance Code provides for further damages that may not even be available in a traditional bad faith action. Both common law and New Mexico statutory law have taken a strong stance against insurance companies acting in bad faith.

Many forms of unfair treatment could be considered bad faith, including:

• Unreasonable delays in responding to your claim;
• Deceitful statements regarding the terms of your policy;
• Refusal to pay on a meritorious claim;
• Refusal to address a claim;
• Refuses to defend you or pay when liability is determined;
• Unfairly changing the terms of your policy; and
• Many more unfair practices

If you feel that your insurance company has acted in bad faith in handling your case, you may have a claim.

Contact us to discuss your rights and whether or not you may be entitled to damages for your insurance company’s mistreatment of you.