Your Insurance Company’s Breach of Contract

Insurance is a type of protection that gives policyholders peace of mind in knowing their health, body, property, or assets will be safeguarded in the event of an incident. The company acting as the insurer provides the financial support in exchange for a premium being paid by the policyholder. By law, the insurance company is bound to provide the insured with any help, assistance, or support at the time of need. 

If the insured had an accident, the insurance company must provide all services and coverage that was outlined in the contract signed by both parties. As soon as payments are made, and up to date, both parties must adhere to the rules of the contract. If the insured or insurance company does not fulfill all of the terms of the contract, it may be considered a breach. 

What is a Breach of Insurance Contract?

There are a number of ways in which either an insured party or insurance company can breach a contract. For example, as a lawyer might explain to you, if an insurance company denies any rightful coverage to the insured, it may be considered a breach. Or, if the insurance company only pays for a portion of a claim after a weather-related event, it may be a breach. 

Common Examples of a Breach of Contract

• The insurance company denied the claim for unreasonable circumstances
• The insurance company refused assistance to the insured
• The company delayed paying out on the claim
• The company misinterpreted the contract
• Benefits mentioned in the contract were denied
• There was no investigation, but the insurance company denied the claim

Bad Faith Insurance

In some cases, a breach of insurance contract can lead to a bad faith insurance claim. Insurance companies have a duty to offer the insured good faith and fair dealing practices. Sometimes the company will practice acts of bad faith; such as failing to pay on a claim. 

Damages that Might Be Collected

If you can prove that an insurance company breached the covenant of fair dealing and good faith practices, it may be possible to recover damages that results from the breach. These damages may include:

• Loss of use of the insurance proceeds
• General damages
• Consequential losses
• Lawyer’s fees
• In some cases, punitive damages

It might also be possible to recover damages for emotional distress; however, you would need to prove that the insurer’s conduct, or lack of, was the direct result of it. In general, as a lawyer might tell you, once any of the economic losses are established, damages for emotional losses can be recovered. 

Time Limits to File an Insurance Breach of Contract Claim

All states have time limits to file an insurance breach of contract claim or bad faith insurance claim. In general, this statute of limitations is two years from the date of incident or discovery. Many insurance companies have their own contractual obligations which give the insured just one year after the breach – regardless of what the state laws are. Calculating this one year period is not always easy which is why you should reach out to a qualified lawyer for guidance. 

If you would like to know how to file a claim for your insurance company’s breach of contract, contact us today at Saavedra Law Firm for a consultation.