table of contents
The basic meaning of bad faith in the context of the law is arranging a contract, agreement, or deal terms without actually intending to follow through on your responsibilities and obligations.
Civil law is predicated on the assumption that everyone will operate on a good faith basis when making deals, negotiating contracts, and adhering to agreements, but it’s inevitable in a society that bad faith dealings happen quite often.
Operating on the basis of bad faith is more than just a poor look, though. It has real consequences, including making the bad faith party potentially liable for any damages caused by their actions. Find out below the definition of bad faith and it’s legal implications.
Bad Faith Defined: Legal Context
If you’re wondering what is bad faith under the law, in a nutshell, it is intentionally engaging in dishonest dealings that produce legal or contractual obligations. The bad faith party misleads one party into believing they will fulfill their duties while never actually having the means or ability to do so.
Common Examples of Bad Faith Practices
When looking at the in bad faith meaning in the context of insurance, your provider may have promised to provide you with specific benefits if you paid into a policy every month. When the time arises when you want to file a claim for your benefits, suddenly there are problems that prevent you from receiving what you’re owed.
One of the ultimate bad faith examples is when your provider hits you with an outright claim denial without any justifiable cause. Here are a few common examples of bad-faith practices your provider may attempt:
- Failure to inform you about policy changes that impact coverage.
- Intentional coverage misrepresentation that leaves you uncovered.
- Policy cancellation without notice.
- Refusal to perform a proper investigation.
- Unreasonable delay in payouts or processing your claim.
In terms of bad faith defined in insurance claims, this list is not comprehensive. There is a whole host of tactics your provider might attempt to employ to derail your case and minimize your payout. Talk to an attorney if you think you might be a victim of bad-faith dealings.
How to Prove Bad Faith in Insurance Claims
If you believe your provider operated in bad faith, then it’s a good idea to talk to a lawyer. You should also start collecting evidence and documentation that outlines your policy coverage, your payment terms, proof of your payments, and statements or evidence that show bad faith behavior. This evidence will help prove the other party’s breach of duty.
What Does Bad Faith Mean for Policyholders?
In the context of insurance, bad faith dealings can lead to claim denials, prolonged investigations, false promises, payouts that never arrive, and an overall horrible experience for policyholders.
Typically, when you work with a bad-faith insurer, you wind up unexpectedly having to cover expenses that you believed you had covered under your policy. This loss is often compounded by the fact that you’ve likely paid into your policy for years, leaving you with less money to cope with an unexpected expense.
The good news is that you do have legal recourse. Bad faith lawsuits allow you to pursue compensation from your provider for the damages you suffer as a result of their breach of duty. Under the law, the contract you and your provider entered into was legally binding, so if your insurer doesn’t fulfill their obligations, then you are entitled to compensation.
Consult with a Legal Expert on Bad Faith Claims
Do you believe your insurer or another party you engaged in a legal contract with acted in bad faith? Are you considering seeking compensatory damages from the responsible party? Depending on the level of the other party’s bad faith, you might also be able to file for punitive damages, too, to help prevent the responsible party from entering into similar bad faith contracts in the future.
Bad and good faith disputes can get complicated fast, so it’s often the best idea to consult with a lawyer before officially filing your case. The right lawyer will help you value the damages associated with your case, document what happened, and help you officially file your claim. As the negotiation process ramps up, your attorney will advocate for your best interests.
Glossary References
https://www.irmi.com/articles/expert-commentary/bad-faith-litigation-trends-and-emerging-tactics
Every case is unique, so we tailor our approach to meet your specific needs.
