Insurance Bad Faith

Your insurance policy is a paid-for promise by your insurance company to provide you with insurance protection and to treat you fairly. Your insurance company has a duty to negotiate and settle your claims in good faith.

Insurance bad faith is a legal term that describes a tort claim that an insured person may have against an insurance company for its bad acts. Insurance companies owe a duty of good faith and fair dealing to the individuals they insure and their household members. This duty is often referred to as the “implied covenant of good faith and fair dealing” which automatically exists by operation of law in every insurance contract.

An insured person may sue their insurance company for breach of contract, unfair or deceptive trade practices, or unfair claims practices. A plaintiff in an insurance bad faith case may be able to recover an amount larger than the original face value of the policy, if the insurance company’s conduct was particularly egregious or is shown to have violated. An example of this occurs when an insurance company refuses to offer Uninsured/Underinsured Motorist coverage to its insureds after a car crash even though it knowingly refused to follow the clear rules set forth by the New Mexico Supreme Court regarding Uninsured/Underinsured Motorist coverage.

Insurance companies for third parties also have a duty of good faith toward an injured ­person, but that duty is much less than the duty owed by your own company. A claim of bad faith against a third party’s insurance company arises only if the company, through its adjuster, has engaged in outright lies or fraud or has ­interfered with your ability to pursue the claim (such as by tampering with a witness, withholding evidence, or the like).

If you believe a third-party insurer has engaged in such outrageous behavior, contact Las Cruces Insurance Bad Faith Attorney Mollie McGraw.