Grounds for Finding Bad Faith

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When an insured asks a question of his or her insurer an answer is expected. An insurer should respond to all inquiries promptly, and in no event later than 15 days. If an insured submits a proof of loss to which the insurer has agreed and asks “when can I expect to be paid?” the insurer should respond with specificity, immediately. Most policies and state regulations require payment within 30 calendar days of agreement to the proof of loss. If the question is ignored and payment is not made, after the insurer agreed to the proof of loss, the insurer is breaching the contract and if without good cause, the covenant of good faith and fair dealing. Often, bad faith is merely the difference between courtesy and lack of courtesy.

An insurance company will not be allowed to deny coverage where all the relevant facts were known to the insurer at the outset, but it unreasonably delayed in asserting a basis for disclaimer.