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Questions and Answers

What if an insurance company doesn't honor the policy and pay a legitimate claim?

         An insurance policy is a contract between the company and the insured. Both parties are bound to the terms of the contract and must act in good faith. If a legitimate claim is filed, but then denied, the insurance company is in breach of the contract. The insured can then file a claim for the damages that should have been paid and may be able to collect the additional expenses that arise out of suing the insurance company. If you find yourself in this situation, contact the Department of Insurance (or similar) in your state.

What is insurance company good faith?

         The law imposes on insurance companies the duty to act in good faith and to deal fairly with the insured person. This means that when a person files a claim of loss, the insurance company cannot make up a reason to deny the claim or look for ways to escape its obligation to pay. The insurance company must fairly determine the eligibility of the claim for payment.

         Another protection to insureds and beneficiaries in interpreting insurance policies is the rule concerning ambiguities. If there is a question concerning what is covered under an insurance policy or what the various terms mean, the courts will interpret confusing, complicated or ambiguous contract terms against the insurance company to give the insured person coverage

If the insurance company won't settle within policy limits and ultimately the case goes to trial with the result of an award above policy limits, is this bad faith?

         First, the law varies from state to state’ so you should consult an attorney familiar with the law in your jurisdiction. Generally, insurance carriers have a duty of good faith and fair dealing when it comes to defending their insured. The company doesn’t automatically have to settle within the policy limits. But where there’s a potential for exposure in excess of the policy limits, the carrier can’t act unreasonably in not settling within the policy limits. If they fail to do so and you are hit with a verdict in excess of the policy limits, the company may be on the hook for the excess and could be sued by you for acting in bad faith in handling your claim. If you’re concerned that the insurance company is not acting in your best interests, hire a lawyer to review your case.

I read the terms of my policy one way. My insurance company sees it completely differently. Who determines who’s right?

         The Departments of Insurance (or similar) of each state recognized that confusion may arise over the use of terminology and clauses used in insurance policies. So when a suit is filed relating to the meaning, and the resulting obligations, under an insurance contract, the courts have developed "rules of construction" for reviewing the policy. Typically, if there is more than one way to interpret a word, phrase, or clause, the interpretation that would include coverage is generally used. And if a word, phrase, or clause, excludes coverage, the most restrictive application is generally accepted.

I think the offer the insurance company gave me is really, really low. Is this bad faith?

         Intentionally offering a settlement far lower than what is reasonable could be a case for bad faith. Insurance companies have an obligation to deal with their insured in a reasonable, fair manner. “Low-balling,” as it is typically referred to, is simply a form of bad faith.

Can I appeal a claim denial?

         Yes. Your policy will detail the procedure you must follow regarding a denial. First, be sure to get the specific reasons for the denial in writing. Then, review your policy for the review or appeal process. You typically must follow the appeal steps as provided in the policy before filing a court action.

Call us now and let us get you the justice you deserve!  

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14156 Magnolia Boulevard, Suite 200, Sherman Oaks, California, 91423, (818) 788-7776

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