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Defining bad faith as it relates to insurance claims

Insurance companies in Florida and throughout the country are required to act in good faith in investigating and paying out policy claims. However, bad faith is defined differently depending on where the claim is made. In some cases, a bad faith action by an insurance company is a tort whereas it could be considered a breach of contract in other instances. In a tort case, a policyholder must show that benefits were withheld and that doing so was unreasonable.

Depending on the facts of such a case, negligence alone may not be enough to show that an act was taken in bad faith. In showing that benefits were withheld, it may be necessary to prove that a claim was valid and that it was actually denied by the insurance company. It is possible that state law determines whether an action is deemed to be in bad faith.

These actions may range from failing to investigate a claim in a timely manner to not giving a good enough reason to deny a claim. It may also be an act of bad faith to not offer a compromise in the event that a claim is denied. If an investigation into a claim is carried out, the insurance company should have reasonable standards when doing so. Otherwise, a policyholder could claim an insurer acted in bad faith.

A denied life insurance claim may make it harder for an individual to provide for themselves financially. It may also make it harder to provide for family members or other dependents. An attorney may be able to review the case and determine if the claim was denied improperly. If so, an attorney may take steps to get the denial decision overturned. These steps might include taking an insurance provider to court.

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