Bad Faith in Dealing with Insured

I’m Katelyn Holub, an attorney focusing on personal injury law in northwest Indiana.

Welcome to Personal Injury Primer, where we break down the law into simple terms, provide legal tips, and discuss personal injury law topics.

In our last episode, we discussed the requirement that insurance policies in Indiana containing ambiguities are required to be read such that the ambiguity favors the insured and not the insurance company that drafted the insurance policy.

In this episode, we discuss how, consistent with the same reasoning, an insurance company must deal with its insured in good faith.

As you will recall the caller in the previous episode was concerned because his policy benefit of temporary housing while his house was being repaired would run out before the repairs would be completed. The reason his benefits were going to run out is because the insurance carrier wasted time in evaluating the loss he suffered in the fire.

The duty of good faith and fair dealing on the part of an insurance company to fulfill its contractual obligations under the policy includes things like refraining from:

• causing an unfounded delay in making a payment
• being deceptive with the insured
• seeking to take unfair advantage to pressure the insured to settle
• making an unfounded refusal to pay policy proceeds

In the caller’s case, a couple of these obligations of good faith and fair dealing are called into question, most particularly causing an unfounded delay.

In the caller’s case, the insurance company sent out an adjuster the day after the fire but then took three months to evaluate the claim. So is that an unfounded delay? Is that bad faith on the part of the insurance carrier?

Well, one of the elements of proof in bad faith cases is to show a conscious wrongdoing by the insurance company.

If the delay was due to a dishonest purpose and ill will on the part of the insurance company it very well may be bad faith.

However, if the delay was due to unforeseen circumstances, like a pandemic, then the delay may escape rising to the level of bad faith.

I hope you found this information helpful. If you are a victim of someone’s carelessness, substandard medical care, product defect, work injury, or another personal injury, please call (219) 736-9700 with your questions. You can also learn more about us by visiting our website at DavidHolubLaw.com – while there, make sure you request a copy of our book “Fighting for Truth.”