Insurance policies are meant to provide protection and peace of mind when something goes wrong. Unfortunately, some policyholders discover that their insurer is not acting fairly when a claim is made. When this happens, it may be considered a bad faith insurance claim.
At Beckett, our team has extensive experience dealing with insurance companies and helping clients who feel they have been treated unfairly. Understanding what bad faith means, how it happens, and what your rights are is the first step toward protecting yourself.
What Is a Bad Faith Insurance Claim?
A bad faith insurance claim arises when an insurance company fails to handle a claim honestly, fairly, and in accordance with its legal obligations. In Ontario, insurers have a duty of good faith, meaning they must treat policyholders fairly and assess claims properly based on the evidence provided.
Bad faith goes beyond a simple denial of benefits. It involves conduct that shows an insurer is not acting fairly or is intentionally avoiding its responsibilities under the policy.
This can apply to many types of insurance, including:
- Disability insurance
- Car insurance
- Property insurance
- Life insurance
- Accident benefits claims
The Duty of Good Faith in Insurance Claims
Insurance companies are legally required to act in good faith when dealing with policyholders. This means they must:
- Investigate claims promptly and thoroughly
- Consider all relevant evidence fairly
- Communicate clearly and honestly with the policyholder
- Make decisions based on facts, not assumptions or bias
Policyholders also have responsibilities, such as submitting accurate information and cooperating with reasonable requests for documentation. However, the insurer carries the primary duty to handle claims fairly and reasonably.
When this duty is breached, it may give rise to a bad faith insurance claim.
What Counts as Bad Faith Insurance Practices?
Bad faith can take many forms. Some common examples include:
- Unreasonably delaying the processing of a claim
- Failing to properly investigate a claim before denying it
- Misrepresenting policy language or coverage terms
- Requesting unnecessary or excessive documentation
- Ignoring key evidence that supports the claim
- Offering a settlement that is significantly below the value of the claim
- Cancelling or penalizing a policyholder because they made a valid claim
- Denying a claim based on irrelevant or outdated information
While each case is unique, these behaviours may indicate that an insurer is not acting in good faith.
Bad Faith vs Negligence: What Is the Difference?
It is important to understand the difference between bad faith and negligence, as they are not the same in a legal context.
Negligence typically refers to careless or poor decision making. For example, an adjuster may make an error or fail to review all documents properly.
Bad faith, on the other hand, involves intentional or reckless disregard for the policyholder’s rights. This means the insurer may be acting dishonestly, unfairly, or with improper motives.
In short, negligence is about mistakes. Bad faith is about unfair or dishonest conduct.
Common Types of Insurance Claims Involving Bad Faith
Bad faith issues can arise in many types of insurance disputes. Some of the most common include:
- Disability Insurance Claims: Disputes often arise when insurers deny long-term disability benefits despite medical evidence supporting inability to work.
- Car Insurance Claims: Policyholders may experience delays or reduced settlements after an accident.
- Property Damage Claims: This includes fire, flood, or other property loss where insurers may undervalue damages or delay payment.
- Life Insurance Claims: Disputes can occur when insurers refuse to pay benefits to beneficiaries.
- Accident Benefits Claims: These claims may be denied or reduced despite clear documentation of injury.
Signs Your Insurance Company May Be Acting in Bad Faith
You may be dealing with bad faith insurance practices if you notice:
- Repeated delays without clear explanation
- Sudden changes in the insurer’s position on your claim
- Lack of clear communication or unanswered questions
- Requests for information that seem unnecessary or excessive
- A denial that does not match the evidence provided
If any of these situations sound familiar, it may be time to seek legal advice.
When Should You Contact a Lawyer?
If your insurance claim has been denied, delayed, or undervalued, it is important to speak with a lawyer as soon as possible. Bad faith insurance claims can be complex and often require detailed legal knowledge and strategy.
A personal injury lawyer can help by:
- Reviewing your insurance policy and claim details
- Identifying whether bad faith has occurred
- Communicating with the insurance company on your behalf
- Negotiating for fair compensation
- Taking legal action if necessary
The earlier you get legal support, the better your chances of protecting your rights and building a strong case.
How Beckett Can Help
At Beckett, our team understands how overwhelming it can be to deal with insurance companies, especially when you feel your claim is not being treated fairly. We are committed to helping clients navigate complex insurance disputes with clarity, compassion, and strong legal advocacy.
We take the time to understand your situation and build a strategy tailored to your case. Whether your claim involves disability benefits, property loss, or another type of insurance dispute, we are here to help you pursue the compensation you deserve.
Speak With Our Team Today
If you believe your insurance company is acting in bad faith, do not wait to get help. Contact Beckett for a free case evaluation and find out what your options are.
You deserve to be treated fairly, and we are here to help you protect your rights.
