What is a Bad Faith Insurance Claim?

Insurance companies must act with a sincere intention to be fair, open, and honest, paying claims promptly in case of damages caused by events covered by the policy. Unfortunately, we know this is not always the case. Even if you file your personal injury claim correctly, many companies look for ways to avoid making payments or to reduce the amount of compensation. 

Under Maryland law “Bad Faith” happens when an insurance company deliberately and unfairly avoids fulfilling its legal or contractual obligations and denies a valid claim. If you suspect your insurer or the at-fault insurance company is acting in bad faith, contact us as soon as possible to evaluate your case. 

In virtually all jurisdictions, insurance companies must act in good faith when evaluating, settling, or otherwise responding to personal injury claims submitted by third parties and policyholders. A bad faith claim against an insurance company is a legal case, usually brought by a party who purchased insurance, against an insurance company. The basis of the claim is that the insurance company failed to engage in good faith, as required under Maryland law.

An insurance policy is a contract. While the terms of insurance policies are notoriously complex, when boiled down they are quite simple: the insured agrees to pay a premium in exchange for the insurance company’s agreement to pay for any covered losses. However, insurance companies exist to make a profit, and will often search for ways to reduce the amount of money they need to pay out when facing a claim.

There are two types of bad faith insurance claims, first-party and third-party claims.

First-party insurance claims are claims made by policyholders against their own insurers. Many denials of such claims involve issues with coverage. For example, if you purchase an automobile insurance policy, file a claim, and the insurance company mishandles the claim, you can pursue a first-party bad faith claim.

Third-party insurance claims are those brought by individuals other than policyholders. For example, you may seek compensation from another driver’s insurance company after suffering damages, injuries, or loss of income from an automobile accident that was not your fault.

What is the difference between a first-party claim and a third-party claim?

A first-party insurance claim is a claim against your own insurance company. A claim to your insurance company to receive benefits from uninsured or underinsured motorist coverage, providing that you purchased it, would be a first-party claim. A third-party insurance claim is against another’s insurance company. In a situation where you were somehow at fault in an auto collision that caused personal injury or property damage to another driver, their claim against your insurance company for damages would be a third-party claim.

Examples of When Insurance Companies Act in Bad Faith in Maryland

There are several ways that insurance companies can act in bad faith. Our Maryland attorneys at the Law Offices of Larry B. Litt help file claims against insurers who commit the following forms of wrongdoing:

Failure to Communicate – Insurance companies act in bad faith by failing to communicate with claimants. For example, an insurer may intentionally ignore phone calls, emails, text messages made by an injured party or needlessly postpone handling their claim. In these cases, claimants can sue insurance companies for failing to properly communicate.

Unreasonable Denials – Unreasonable claim denials are also a common way that insurance companies act in bad faith. If an insurer is refusing to provide you with the compensation you seek, then they must provide a clear explanation for their denial. If your claim is denied without good reason, then you should call our law firm right away. Our Baltimore lawyers who sue insurance companies can help fight for the damages that are warranted in your case.

Delays in Payment – Delays in payment can also constitute acts of bad faith committed by insurance companies in Maryland. The insurer in your case may employ this tactic in-order to entice lower settlement agreements. Fortunately, our lawyers can file a lawsuit against an insurance company for improperly delaying payment of your claim.

Inappropriate Settlement Offers – Insurance companies can also act in bad faith by making low, inappropriate settlement offers. Insurers may make low offers in hopes of enticing a settlement agreement for less than your case is worth. Fortunately, our experienced auto accident attorneys can file a claim against the insurance company can help evaluate any settlement offers presented in your case, so that you can successfully determine if the offer is inadequate.

Misinterpreting Language from a Policy – Furthermore, an insurer may also act in bad faith by misinterpreting language from a policy. The following are potential ways that a policy may be misinterpreted:

  • Utilizing language in an unintended manner
  • Interpreting language in a purposely vague way
  • Intentionally misconstruing aspects of a policy
  • Referencing language that is not applicable to your claim

If you were negatively affected by a misinterpretation of language from an insurance company, then you may be entitled to monetary damages. Our lawyers can help you get the compensation that you deserve.

Unreasonable Requests for Documents – Lastly, an insurer may ask for an unreasonable amount of paperwork related to your injuries and your auto collision when searching for reasons to deny your personal injury claim. Fortunately, unreasonable requests for documents can constitute acts of bad faith. Our legal team can file a claim against the insurance companies to help hold an insurance company accountable for making such a request.

Common Bad Faith Actions in Maryland

The insurance adjuster’s job is to protect the company’s income. To do so, they use all kinds of questionable tactics. Some of the most common are:

  • Unreasonable delays in responses and payments
  • Material misrepresentation of facts
  • Withholding of important information
  • Refusing to pay without “investigating,” even when it is clear who is liable
  • Knowingly failing to investigate the claim
  • Misleading you to enter into an agreement

Many states, including Maryland, consider insurance companies to be under an “implied covenant of good faith and fair dealing.” These acts could constitute a breach of the covenant and open the door to a lawsuit.

Is an Insurance Company Unfairly Delaying or Avoiding Payments? We Are Here to Help!

If you or someone you care for is the victim of an insurance company acting in bad faith, the Law Offices of Larry B. Litt can help. Bad faith claims, are complex and the worst mistake you can make is to try to take on the insurance company and its lawyers alone. You need the support of your own legal team. If your auto accident insurance claim was wrongfully denied, call our personal injury attorneys at the Law Offices of Larry B. Litt for a free case evaluation. Our team has over four decades of experience handling bad faith insurance claims. You can reach us anytime day or night at 443-844-1528. Call us now.