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Good Faith and Bad Faith

The duty of "Good Faith and Fair Dealing" deals with how insurance companies must act in regards to:

1. The adjustment of your claim, whether it be a bill or payment, within a reasonable amount of time,

2. Cooperating with you in regards to the claim, ( a timely response to any medium of communication )

3. Notifying you in writing of any claim being denied in addition to the specific contract term(s) or provisions(s) upon which it relies,

4. Must attempt to find a basis to pay the claim rather then find reasons to deny it, and

5. "playing fair" as the duty itself implies.

Understanding Your Insurance Companies Role As A Fudiciary

Generally, the law recognized there major fiduciary duties:

1. duty of loyalty, i.e. a fiduciary must not place his or its own interests ahead of the beneficiary's interest;

2. duty of care, i.e. a fiduciary must exercise an amount of care appropriate to manage the beneficiary's interest; and

3. duty of disclosure, i.e. a fiduciary must disclose certain information to the beneficiary.

The following are encapsulations of duties outlined in Berumen's Do No Evil: Ethics with Applications to Economic Theory and Business, which seems to apply to all fiduciary relationships.

  • Fiduciaries are responsible for ensuring that they have the necessary knowledge to perform in accordance with their capacity.
  • Fiduciaries must disclose any limitations, conflicts of interest, or barriers in performing their duties.
  • Fiduciaries must comply with any legal and professional requirements pertaining to their roles, and also with any relevant moral structures.
  • Fiduciaries must not take unfair advantage of their relationship (e.g., misuse of information) in a way that could have disastrous effects on those who place their confidence in them.

Examples of Bad Faith

Some or all of the following things have been found ( in some states) to constitute "Bad Faith" or an "Unfair Dealing" by an insurance company from whom you purchased a policy.

Bad Faith is not a common thing, and from our experience should only be pursued if a breach of contract has clearly been broken. Speak with your insurance company and express how you feel before deciding to get legal help. In many cases it's just people misunderstanding each other and things can get worked out.

1. Failure to promptly investigate a claim.

2. Failure to properly , thoroughly and reasonably investigate a claim as to liability and damages, if any.

3. Failure to fairly and reasonably evaluate fact of liability.

4. Failure to offer settlement within a reasonable amount of time after investigation and evaluation in favor of its insured, if such occurs.

5. Delay in payment to await settlement with a third-party insurer.

6. Failure to fairly and reasonably evaluate damages.

7. Non-disclosure of information.

8. Failure to inform insured of additional benefits due under the policy.

 


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