Bad Faith Insurance Class Action
When you take out an insurance policy, you enter a contract with the insurance company. The insurance company promises to protect you against covered risks in return for paying premiums. This should be a straightforward agreement, but insurance companies don’t always fulfill their end of the deal. This unethical behavior often amounts to illegal “bad faith,” which happens more often than you might think.
- Bad faith insurance occurs when companies deny or delay valid claims without justification, leaving policyholders without due compensation.
- Common bad faith tactics include underpaying claims, misrepresenting policies, and unjustified cancellations.
- Policyholders can join or start class action lawsuits to hold insurance companies accountable for unfair practices.
- Successful lawsuits may result in compensatory and punitive damages for the financial and emotional harm caused by bad faith.
Insurance companies that act in bad faith do so to advance their bottom line at the expense of policyholders’ well-being and contractual rights. Bad faith insurance lawsuits aim to hold these companies accountable for their actions and recover compensation for affected policyholders.
Types of Class Action Lawsuits Against Insurance Companies
There is strength in numbers, and that’s precisely why class action lawsuits against insurance companies are so powerful. These lawsuits allow individuals to take collective legal action against unscrupulous insurers, providing a way for individuals to seek justice when filing a claim on their own would be impractical.
If you’ve experienced the following types of insurer misconduct, you may be eligible to file or join a class action lawsuit:
Bad Faith
“Bad faith” insurance practices refer to any tactic an insurance company uses to avoid satisfying its contractual obligations to policyholders. Bad faith tactics usually involve an insurer attempting to get out of paying the full value of valid claims without proper justification. Examples of bad faith insurance practices include:
- Denying claims without valid reasons
- Unnecessarily delaying payment of claims
- Failing to investigate claims
- Paying unreasonably low settlements
- Canceling policies to avoid paying claims
- Failing to communicate with policyholders about their claims
These bad faith tactics can occur with all kinds of insurance policies, including home, auto, life, and health insurance. For instance, if your home’s flood damage is covered under your homeowners’ insurance policy, but your insurance company refuses to pay for repairs, this could be an example of bad faith.
If you get into a car accident and your auto insurance company doesn’t investigate the accident, this could also be considered bad faith. Bad faith may also occur when a health insurance company cancels your policy after you receive a cancer diagnosis to avoid paying for your treatment.
Overcharges
Not all misconduct by insurance companies is considered bad faith, but many types of wrongdoing may create grounds for a class action lawsuit. One example is when insurance companies charge excessive premiums.
Insurance companies set premium rates based on risk-related factors, such as the likelihood of you being involved in an accident. However, some companies arbitrarily raise their premiums, which results in policyholders unfairly paying higher premiums. Undisclosed fees (e.g., administrative or service charges) can also lead to overcharging.
Policy Misrepresentation
Insurance companies must provide clear and accurate information to current and potential policyholders. Failure to do so can amount to policy misrepresentation. Intentionally misrepresenting contract terms to policyholders is deceptive and illegal.
It can also result in policyholders not having the coverage they thought they had when filing a claim. Examples of policy misrepresentation include failing to disclose coverage exclusions or exaggerating a policy’s benefits.
Improper Adjustments or Calculations
Calculating and adjusting claims is a critical part of the insurance process, and accuracy is crucial. Unfortunately, some insurance companies miscalculate or improperly adjust claims in their favor. For example, auto insurers often make underhanded adjustments when determining a totaled vehicle’s value. To lower their payout, their adjusters may fail to consider the vehicle’s good condition, extra features, low mileage, and other factors.
Punitive Damages for Bad Faith
Policyholders who suffer harm due to bad faith practices can seek compensation for their financial, emotional, and physical losses. These are known as compensatory damages, and their value depends on the extent of the policyholder’s harm.
Policyholders may also be entitled to punitive damages in cases of extreme bad faith. These damages punish the insurance company for misconduct and deter similar practices in the future. Punitive damages can significantly increase compensation in a bad faith insurance lawsuit, often far beyond compensatory damages.
How To Start or Join a Bad Faith Insurance Lawsuit
There are many pending class action lawsuits against insurance companies. If you were harmed similarly to plaintiffs already in a class, you can join their class action without filing your own. However, if you are a victim of bad faith insurance practices and there is no large-scale legal action against your insurer, you may be able to start a class action as a lead plaintiff.
Contact Class Action U to get started. Our team can connect you with a reputable insurance bad faith attorney who can evaluate your case. After gathering your details, they can guide you through the next steps, which may include gathering evidence to file a complaint.
"*" indicates required fields
