In the United States, insurance companies owe a duty of “good faith and fair dealing” to every person or company they insure. This means an insurance company is required by law to treat their customers fairly and honestly. This obligation is automatically placed upon an insurance company by law in every insurance contract and cannot be waived or amended.
The reason the law places this requirement upon insurance companies is because insurance companies are commonly so large and powerful that it is generally not possible for a customer to negotiate the terms and details of an insurance policy in a fair manner. For the most part, an insurance company offers only a “take it or leave it” insurance policy, and their customer has little or no ability to negotiate the terms. Because of this disparate bargaining power, the law places an additional requirement upon insurance companies to treat their customers fairly – with serious consequences if they fail to do so. In addition, many states have passed laws that place additional obligations upon insurance companies regarding what they can and cannot do when dealing with a customer and when processing a customer’s claim for insurance benefits.
At Heygood, Orr & Pearson, we strongly believe that when an insurance company willingly accepts, for years in some cases, a policyholder’s premiums when no claims are made, that insurance company should be equally willing to be there for the policyholder in a time of need, when a claim is made. When the company refuses to do so willingly, they should be made to do so. This is the case not only because it is what insurance companies commit to when selling the policy and because it is what the actual insurance policy itself says, but because it is the law.
At Heygood, Orr & Pearson, we vigorously stand up for individuals and companies who find themselves in the unenviable position of having an insurance company refuse to treat them fairly and reasonably. When an insurance company fails to treat a customer appropriately and denies a legitimate claim that should be paid, the lawyers at Heygood, Orr & Pearson are willing to take them on, expose their actions and make them pay for their improper and illegal conduct.
Life Insurance Bad Faith
Life insurance claims are not so much a matter of if but of when. When a person buys a life insurance policy that guarantees, upon their death, payment to a designated beneficiary, they expect the insurance company to live up to their obligation upon death. This expectation is especially important for wage earners in a household who realize the financial hardship and potential devastation that could occur to their family when they die. There is a particular “peace of mind” that comes with the purchase of a life insurance policy and the knowledge that one’s dependents will be taken care of upon the policyholder’s death. Unfortunately, insurance companies all too frequently fail to properly live up to their obligations regarding life insurance policies.
Bad faith conduct by an insurance company on a claim for life insurance benefits is particularly devastating for the very same reason that the life insurance policy was purchased in the first place. In the greatest time of need when a family or beneficiary is dealing with the emotional void left by a loved one (who is likely to have been their financial support), the insurance company’s bad faith actions can destroy a family financially and otherwise. It is not at all uncommon to see an insurance company commit bad faith in processing and handling claims for benefits under a life insurance policy.
The attorneys at Heygood, Orr & Pearson have represented policy holders in lawsuits where insurance companies denied paying benefits that were clearly owed under life insurance policies. This is often seen by an insurance company claiming that the cause of death of an insured was not covered by the insurance policy or claiming that the policyholder was untruthful in the application process for the insurance policy.
These reasons for denial of insurance benefits are often inaccurate and occasionally intentionally and fraudulently provided to the policyholder in hopes that the policyholder will simply accept the denial and not
- go though the appeals process for a denied claim and/or
- have the denial reviewed by an attorney who understands the obligations placed upon insurance companies when processing claims for life insurance benefits.
Signs of Insurance Bad Faith
“Insurance bad faith” generally refers to a claim or lawsuit alleging that an insurance company failed to treat one of its customers fairly or appropriately or failed to comply with the specific laws of a particular state regarding how to handle a claim. There are many ways an insurance company can act in bad faith while processing a policyholder’s legitimate claim for benefits under an insurance policy. Some of these include:
- Failing to promptly and quickly process a legitimate claim for insurance benefits
- Demanding unreasonable documentation from a policyholder while processing a legitimate claim for insurance benefits
- Claiming to have lost or never received pertinent information
- Claiming that information was not received in a timely manner while processing a legitimate claim for insurance benefits
- Hiring and relying upon medical or engineering experts who always side with the insurance company
- Declining to conduct a thorough investigation of a claim for insurance benefits
- Asserting that a legitimate claim for insurance benefits is not covered by the insurance policy
- Paying only partial benefits owed under an insurance policy rather than full benefits
- Submitting an offer that is far below a reasonable offer (called low-balling)
- Failing to comply with the laws enacted by a particular state setting forth how an insurance company should process a claim for insurance benefits
- Failing to live up to representations made when selling an insurance policy
- Providing any number of other improper excuses to wrongfully deny, delay or obstruct a legitimate claim for insurance benefits
Common Types of Denied Insurance Claims
An insurance company can commit “bad faith” in connection with processing claims made under virtually all types of insurance policies. However, it is most common to see such tactics with regards to
- life insurance policies
- homeowner’s policies and
- disability policies.
At Heygood, Orr & Pearson, we have seen insurance companies refuse to conduct reasonable investigations into claims for insurance benefits, fail to consider and process claims for insurance benefits in a timely manner, and engage in an investigation regarding a claim for insurance benefits that clearly is designed not to “find the truth” but to simply find a way to deny a legitimate claim. We hold insurance companies to the highest standards and require them to live up their legal obligations – namely to treat their insureds fairly and honestly and comply with the terms of their insurance policies when it comes time to pay an insurance claim, not just when it comes times to collecting premiums.
HO&P Will Fight for Your Rights
At Heygood, Orr & Pearson, we don’t tolerate such conduct. There are many types of life insurance policies, all of which are subject to the good faith and fair dealing laws, which are in place to protect the insured and beneficiaries. Life insurance bad faith often includes:
- Failing to fairly or properly evaluate a claim, including fairly determining the cause and manner of death
- Failing to pay a beneficiary the life insurance benefits in a timely manner
- Failing to pay the correct or full amount of life insurance benefits to the beneficiary
- Claiming that the life insurance policy offered less or different coverage than what was agreed upon with the insured
- Engaging in other actions that work to deny a beneficiary some or all of the benefits in which they are rightfully entitled to
At Heygood, Orr & Pearson, we believe strongly that an insurance company who takes a person’s life insurance premium payments (for many years in most instances) in exchange for promising that they will pay a designated sum to such person’s family upon their death has a fundamental obligation to perform upon such promise. When they don’t, the lawyers at Heygood, Orr & Pearson are here to assist you. If you believe you have been a victim of an insurance company wrongfully denying a legitimate claim for life insurance benefits after the death of a love one or otherwise engaging in bad faith in the handling of your claim, Heygood, Orr & Pearson has the resources, experience and knowledge to protect your rights in your time of need. Contact us for a free case evaluation.