An insurance policy is an agreement or covenant between two parties. The insured seeks to be indemnified in the event of loss or damage to his property, business, or life. The company promises to indemnify the insured by paying him or agreeing to repair the damage to the full extent of the damage.
The policy presumes good faith on both the insured and the insurance company. For the insured, good faith is exhibited when he pays the premium and supplies the information (to the application form) as truthfully as he can. If the information is incorrect, then he may be dealing in bad faith. He may be overvaluing the cost of his property or concealing derogatory in order to get approval for an application for insurance.
Since the insurance company accepted whatever information the insured gave at face value, it is fair for the company to require documentation from the insured when the latter files for a claim. Examples of such documents are: police reports, death certificates, medical reports, statements of account, etc.
There’s really nothing wrong with an insurance company that asks you to supply them with proof of damage, sickness or death. But when you, the insured, have complied with all the requirements and submitted these – and the insurance company drags its feet in the settlement of claims, then you may have grounds to file for court action against the company for breach of contract or bad faith.
When a case is presented to the court for bad faith, the court will simply employ the standard of “reasonableness.” In other words, the court will determine if the actions of the company are reasonable under the circumstances. For example, if the insurance company gives a check to the insured within a week after the insured has submitted his documents, then the insurance company has acted reasonably. The one-week period may be sufficient time for the claims department to ascertain the accuracy of the occurrence and extent of the damage as well as prepare the check for the insured.
However, if the insured has submitted all the necessary papers and the insurance company delays in making a settlement or communicating with the insured, then the insured may file for a case of bad faith. He should then seek the help of an attorney with extensive experience in bad-faith litigation. The legal team will examine all actions of the insurance company which can be construed to be “unreasonable.” Such lawyers who specialize in unfair business practices or bad faith, they believe that it is bad enough for an honest person to experience an unforeseen accident, sickness, death or event. But, it is worse when that person does not get the insurance proceeds – when he expects and needs it the most.
Fresno Branch:
466 W. Fallbrook,
Suite 102
Fresno, CA 93711
San Diego Branch:
10509 Vista Sorrento Pkwy., Suite 430
San Diego, CA 92121
The content of this weblog (blog) contains general information and may not reflect current legal developments, verdicts, or settlements. Webb & Bordson, APC expressly disclaims all liability in respect to actions taken or not taken based on any or all of the contents herein.”
NOTICE OF CONFIDENTIALITY: This confidential E-mail is from a law firm. It is covered by the Electronic Communications Privacy Act, 18 U.S.C. Sections 2510-2521, and is legally privileged. If you received this transmission in error, please reply to the sender to advise of the error and delete this transmission and any attachments.
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with the requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.