Bad Faith -some examples

Definition: an insurer is supposed to act in good faith when investigating your claim. By acting in bad faith, that insurer may deny your claim for illegitimate or spurious reasons. Bad faith is not the same as negligence or simply making an honest mistake; rather, it happens when the insurer intentionally takes actions or fails to take actions so as to avoid paying out on a claim

Fact: Most claims do not have a bad faith claim component and you would be better off filing an application or claim declaring benefits if your Insurer stops paying.

However bad faith does happen and although the amounts awarded are not typically large it may be worth pursuing-legal advice recommended.

Examples: An insurer may be acting in bad faith if the insurer delays, discounts or denies payment without a reasonable basis for its delay, discounting or denial.

Failure of insurer to acknowledge and reply promptly upon notification of a covered claim.

Failure of insurer to affirm or deny coverage of claims within a reasonable time upon receipt of claim

Failure of insurer to promptly provide reasonable explanation and basis when denying or making a compromise offer of claim

Using harassing, intrusive or demeaning investigative methods and procedures which victimize the insured. (think of rehab)

Utilization and/or development of deceptive insurer schemes or use of outside company services set up or conducted to carry out the same false pretense schemes (i.e. “Independent Medical Examiner Paper Reviews”) for the purpose to be able to wrongfully deny or reduce payment of claims.

Insurer advice to claimant not to hire a lawyer.

Using inaccurate or wrongful information of a factual or legal nature to diminish, deny or delay payment of a claim.

Unreasonable misinterpretation of policy language.

Health providers you are referred to by your Insurer, not acting in the best interests of the patient/insured and/or acting for their own self-enrichment at the health expense and disadvantage of the patient.

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on the funnier but true side Independent Medical Examination Agenda - YouTube

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These are good examples. A couple of things to keep in mind. The USA and Canadian courts treat Bad faith damages VERY differently. What would qualify for bad faith compensation in the USA will not do so in Canada. We are miles apart with the USA being considerably more favourable to insurance claimants. Canada being extremely favourable to insurance companies.

Also, something can qualify as “bad faith conduct” but not result in you being entitled to bad faith compensation or damages. We see this all the time. Bad faith actions, even if done repeatedly will not automatically result in a court awarding bad faith damages in Canada. It is a point of great frustration.

True, even in the US just like Canada any large award will likely be reduced via the Appeal Court.
However if you have strong proof of bad faith or outrageous conduct you have a better chance to settle on better than average terms as the Insurer has tons of money but they do not want new law or a favorable decision on the record.

That said there are more recent cases where Insureds are finally being made whole and having all legal fees awarded.

Insurance companies love to place in the media stories about Insurance fraud and huge settlements to keep the bias against claimants out there. For anyone reading this check out the truth on the McDonald coffee lawsuit