While risk is inherent in any business, insurance can help hedge against a variety of potential pitfalls. But what if your insurer is not forthcoming with a full and proper payout when your business suffers from a covered event?
Under traditional contract law, insurers could be sued and forced to fulfill their obligations per the insurance policy. Yet, this resolution incentivized unfair dealing by insurers; it could pay for insurers to deny legitimate claims, as the most they'd be forced to pay was what was originally owed and some claimants would give up rather than face the legal battle. Insurance bad faith law was developed to rebalance the scales.
Signs of Bad Faith Include Unexplained Claim Delay or Denial
Every insurer operating in California has an implied duty to conduct business with good faith and fair dealing. Among other things, this means a business insurer cannot deny a valid claim simply as a means of turning a profit.
When an insurer does issue a wrongful denial, a bad faith insurance claim can not only recover the amount your business is due under the policy; in instances of egregious insurer misconduct, it can also secure additional monetary damages.
Insurers acting in good faith will look for ways to pay out valid claims quickly, fully and efficiently; insurers acting in bad faith will systematically delay, deny and undervalue claims. That being the case, the most obvious red flag that could indicate you are dealing with a bad faith insurer is the denial or delay of a claim that seems to be substantively valid under the policy. However, there are some more subtle warning signs that an insurer is acting in bad faith, including:
- Your insurer fails to initiate a prompt investigation of your claim.
- Your insurer requests an excessive amount of documentation that is not required under the policy.
- Your insurer tells you an attorney is not required or otherwise encourages you not to seek legal counsel.
Contact an Attorney About Your Denied Business Insurance Claim
Your business likely depends on a variety of types of insurance, from liability policies to property coverage. In order to ensure you return to business as usual as quickly as possible after a covered event, you need to collect the full amount you are entitled to.
If your insurer is denying, delaying or undervaluing your claim, get in touch with an insurance coverage denial attorney. Your attorney can assess your case and explore the best legal options for your business.