As a business owner, one frustrating thing you may have to deal with is a denied insurance claim. If you believe that your claim was made in good faith, then you may feel that the only option is to pursue a bad-faith insurance claim.
A bad-faith insurance claim occurs when an insurance company fails to process, investigate or pay your claim in a reasonable manner. For example, think about water damage to your business. If it is caused by a flood, you might believe that your insurance covers flood damage. You may have even clarified this with an insurance agent before agreeing to buy the policy. Now, if you’re denied because of a lack of flood-damage coverage, you may feel that the policy was misrepresented and file a claim against the insurance company.
What factors could lead to a bad-faith claim?
There are a few factors that could lead to a bad-faith claim. Some might include:
- Failing to have reasonable standards for processing or investigating claims
- Failing to deny or approve a claim within a reasonable amount of time after receiving proof of the insured’s losses
- Failing to acknowledge a claim
- Misrepresenting a policy or provisions in an insurance policy
- Failing to give a reasonable explanation for the denial of insurance benefits
It can be hard to know if you have a bad-faith insurance claim, so it’s a smart choice to discuss your case with someone who has knowledge of your specific state laws. Our site has more on bad-faith insurance claims and how to protect your business against them.