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What Does It Mean When an Insurance Company Acts in Bad Faith?

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Under US law, insurance companies are required to act in good faith to the person they insure. This means the insurance company is required to act fairly and honestly with the policyholder. Should the insurance company violate this good faith, the policyholder can file a claim against the insurance company. However, these claims can be complicated to handle, and it is greatly recommended to proceed with caution following the legal advice of an experienced lawyer.

In Tennessee, the bad faith law only applies to first-party insurance contracts, referring to the contract made between the insurance company and the policyholder. Insurance companies can act in bad faith by:

  • Failing to communicate policy limits or vital information
  • Refusing to investigate the claim
  • Acting in a rude, threatening, or intimidating manner
  • Refusing to negotiate on the claim in an appropriate amount of time
  • Denying payments without a valid reason.

Be aware of these tactics when dealing with insurance companies or have an experienced lawyer assist you. The best way to protect against these actions of bad faith is to document your meetings with the claims adjuster. Write down dates, times, and details of any instances where the claims adjuster may have acted in bad faith. The more detailed your notes, the better. You can also report insurance companies who have acted in bad faith to your state’s insurance board but keep in mind that each state approaches bad faith claims differently. However, if the state insurance board does find that the insurance company acted in bad faith, the insurance company can be fined for the transgression.

You may further pursue a bad faith claim by bringing it up with the claims adjuster. Sometimes insurance companies pay attention to the term and will do their utmost to avoid a lawsuit by reaching a fair compromise with you. If that doesn’t work, you can put your accusation in writing via a letter. However, the insurance company may respond or retaliate quickly after receiving your letter. Due to how complicated bad faith claims can become, it is best to receive guidance from someone experienced in bad faith law. Contact our experienced Nashville lawyers today. We’ll do our best to get you the compensation you deserve.

Jeremiah 29:11, “For I know the plans I have for you,” declares the Lord, “plans to prosper you and not to harm you, plans to give you hope and a future.”

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