One of the most common lawsuits associated with insurance is bad faith. According to the Florida Bar Journal, bad faith statutes provide social benefit by encouraging insurers to make fair settlements. Bad faith insurance happens when the insurer performs a dishonest action, normally by breaching or not fulfilling what was written on the contract. Sometimes, bad faith may also mean that the insurance company misleads the other party and creates an agreement without actually meaning to keep their end of the bargain. Not only is that a violation of the rights of the insured person, but the act of bad faith is also a violation of the law.
The topics covered under bad faith insurance sure are broad, but how will one identify if an insurer is practicing bad faith? According to the website of a Dallas insurance lawyer at Smith Kendall, PLLC, one of the most obvious signs people may notice is when the insurer denies or delays payments without substantial reason. According to Fight Bad-faith Insurance Companies, an insurance case may also be considered bad faith when the insurer fails to provide prompt response after receiving a claim or when they take action based on recent changes in policy without informing the insured.
As mentioned earlier, the discussion of bad faith insurance covers a long list, and the specific issues may not be obvious to the insured.