Hurricane Sandy: Good Faith Insurance Practices Are a Two-Way Street

Bad Faith Insurance Lawyer

The devastation that so many New Yorkers and New Jerseyans suffered after Hurricane Sandy has brought the issue of bad faith insurance practices into the public eye.   Thousands of homeowners and business owners continue to wait for their rightful proceeds or are starting the process of filing a bad faith insurance practices lawsuit against their insurers.  However, when it comes to “bad faith” practices, it’s important to look at “good faith” practices as well – and it’s a two-way street.

Who Owes Who A Duty?

That is the ultimate question.  The answer is that while insurance companies have a duty to treat policyholders in good faith, policyholders also have obligations to insurance companies. An insurance policy is a contract between both parties.  In its simplest terms, you pay premiums and an insurance company accepts a risk in return.  Unfortunately, getting your claim paid quickly, accurately and fairly are rarely that simple.

What Duties Does Your Insurance Company Owe You?

Every insurance company owes its policyholders a duty of good faith and fair dealing.  Although a legal term, it basically means what it says.  For insurance companies, that equates to:

  • Adjusting your claim promptly by either paying it or denying it – strictly based upon the terms and conditions of your policy.
  • Cooperating with you regarding the claim – meaning responding to your phone calls, emails and letters in a timely manner.
  • Informing you – in writing – if the insurer denies your claim and specifically identifying each contract term or provision upon which it relied to reach the decision.
  • Attempting to find a basis to pay your claim – instead of looking for ways to deny it, delay it or offer you less than what you’re due.

When insurance companies don’t own up to these duties, they are likely acting in bad faith and you can hold them accountable for their actions – and force them to pay your legitimate claim.

What Duties Do You Owe Your Insurance Company?

As we mentioned above, an insurance policy is a contract in which both parties have duties. For policyholders, that equates to:

  • Paying your premiums on time – fully or in connection with an agreed upon payment plan.
  • Submitting an insurance claim to your carrier in a timely manner – which will generally be defined in your policy.
  • Providing your insurance carrier with all the information it requires, and is entitled to, under the policy or the law.
  • Providing your insurer with a statement of your loss under oath when required.
  • Cooperating with the insurer regarding your loss to the best of your abilities.

When policyholders don’t own up to their duties, it makes it easier for insurance companies to simply point to the provisions of your policy (your contract) and deny your claim.

Know What Your Policy Covers & Excludes

Anyone who’s ever had insurance knows that insurance policies are long, confusing and generally difficult to understand unless you have an insurance background.  The truth is that many policyholders simply don’t read their policy beyond the declarations page that gives an “executive summary” of coverage.

Make sure that you know what your policy covers – and excludes.  In the long run, it can help you to determine whether you’re being treated in good faith – or bad.  If it’s the latter, contact an experienced insurance dispute lawyer to assist you in getting all of the benefits your policy provides.