When dealing with a personal injury case in New York, you expect the insurance company to act fairly and honor its policy. However, insurers sometimes engage in “bad faith” practices. Knowing the legalities of insurance bad faith is crucial for securing just compensation for your damages. Please continue reading to learn more about this issue and how a skilled New York City Personal Injury Lawyer can help ensure you are treated fairly during settlement negotiations.
What Constitutes Insurance Bad Faith?
An insurance company may be deemed to have acted in bad faith if its conduct or inaction is found to be unreasonable or lacking proper justification. Every insurance policy inherently includes an “implied covenant of good faith and fair dealing,” which requires both policyholders and the insurer to act honestly and justly when resolving claims. If an insurance company violates this covenant, it could be held liable for damages that exceed the initial claim amount.
In personal injury cases, common instances of insurance bad faith include:
- Denying a claim without a legitimate reason
- Delaying payments
- Conducting insufficient investigations
- Requesting excessive or unnecessary materials
- Making unfair settlement offers
- Misrepresenting policy terms
- Failing to defend policyholders
- Threatening or coercing the policyholder
- Unreasonably refusing to settle
It’s important to understand that bad faith claims in personal injury law can stem from actions by your own insurance company (first-party) or the at-fault party’s insurance company (third-party). To successfully pursue a bad faith claim, you will need to demonstrate: the wrongful withholding of benefits due under an insurance policy, and the insurer’s unreasonable conduct. However, the specific proof required varies significantly depending on whether the claim is first-party or third-party.
What Legal Remedies Are Available?
When an insurance company acts in bad faith by failing to fulfill its obligations fairly and honestly, policyholders have several potential legal avenues for redress. These include purusing contract damages, consequential damages, and, in some instances, punitive damages to penalize the insurer’s misconduct.
Contract damages refer to the benefits stipulated in the insurance policy itself. In a bad faith claim, the insurer becomes liable for the full amount that should have been disbursed according to the original policy terms. Consequential damages, on the other hand, encompass additional losses incurred due to the insurer’s bad faith conduct. This includes economic damages and emotional distress. In some cases, punitive damages are awarded to punish the insurance company for engaging in egregious conduct to deter similar actions in the future. Furthermore, attorney’s fees and litigation costs may be recoverable to offset the financial burden of pursuing legal action for bad faith insurance practices.
If you suspect that an insurance company is acting in bad faith, it’s in your best interest to contact an experienced attorney from James Newman, P.C. Our legal team is prepared to advise you on the best course of action given the unique circumstances of your case. Connect with our firm today to learn how we can fight for you.
