$370,000 Denied Life Insurance Claim Successfully Resolved
We are pleased to announce that our life insurance attorneys successfully recovered $370,000 on behalf of a client whose life insurance claim was initially denied. After thoroughly reviewing the claim file, it became clear that the insurance company had failed to provide a valid reason for the denial and had engaged in unreasonable delay tactics. Our firm stepped in, challenged the denial, and compelled the insurer to pay the full benefit amount. This case is a prime example of what is commonly referred to in insurance law as bad faith—a situation where an insurance company puts its own interests ahead of its contractual obligation to treat policyholders fairly and in good faith.
What Is Life Insurance Bad Faith?
Life insurance bad faith occurs when an insurance company acts dishonestly, unfairly, or unreasonably in handling a claim. Insurance policies are contracts, and under these contracts, insurers have a duty of good faith and fair dealing. This means they must act honestly and fairly when evaluating and paying out claims. When an insurer breaches this duty by denying a valid claim without a reasonable basis, failing to investigate a claim properly, or delaying payment without justification, the beneficiary may be entitled to more than just the policy amount—they may also recover additional damages for the insurer’s misconduct.
Examples of Bad Faith in Life Insurance Denials
Unreasonable Claim Denials – The insurer denies a claim with no valid contractual or factual reason, or relies on an exclusion that doesn’t apply to the facts of the case.
Failure to Investigate – The insurer fails to conduct a prompt, thorough, or unbiased investigation before denying a claim.
Delaying Payment Without Justification – Even after all required documents have been submitted, the insurer stalls or prolongs the claims process unnecessarily.
Misrepresenting Policy Terms – The insurer deliberately misinterprets policy language to create a justification for denial.
Intimidating or Misleading Beneficiaries – The insurer uses threats, misinformation, or confusing language to deter the beneficiary from pursuing the claim.
Refusing to Communicate – The insurer avoids or ignores communications from the beneficiary or their attorney, thereby creating unnecessary obstacles to resolution.
Rescinding the Policy Without Proper Grounds – The insurer cancels the policy after death by alleging misrepresentation, often without legal justification or adequate proof.
Using Vague or Ambiguous Exclusions – The insurer applies unclear policy provisions in an overly broad manner to avoid paying claims.
These actions are not only unethical—they may also be illegal under state insurance laws. Courts in many jurisdictions allow claimants to sue for bad faith, potentially awarding damages that far exceed the original value of the life insurance policy.
What You Can Recover in a Life Insurance Bad Faith Case
When a life insurance company is found to have acted in bad faith, the claimant may be entitled to:
Full death benefit amount under the life insurance policy
Interest for delayed payment
Attorney’s fees and court costs
Compensatory damages for emotional distress or financial harm
Punitive damages to punish egregious misconduct and deter future bad faith practices
Not every denial qualifies as bad faith, but many do—especially when the insurer delays, denies without evidence, or invents pretexts to avoid payment. If your life insurance claim was denied unfairly or delayed without explanation, our attorneys can investigate and determine whether you have grounds to file a bad faith lawsuit.
FAQ: Life Insurance Bad Faith
What does “bad faith” mean in life insurance claims?
Bad faith refers to an insurer’s wrongful or dishonest conduct in denying, delaying, or mishandling a valid life insurance claim. It violates the insurer’s legal duty to act fairly.
How do I know if my denied claim involved bad faith?
If your claim was denied without a valid reason, the insurer failed to investigate, or they delayed payment for no legitimate cause, you may be dealing with bad faith.
Can I sue my insurance company for bad faith?
Yes. If you can prove the insurer acted unreasonably or dishonestly, you may be entitled to damages beyond the policy amount, including legal costs and punitive damages.
What are punitive damages in bad faith cases?
Punitive damages are financial penalties awarded to punish the insurer for egregious conduct. They go beyond compensating the claimant and aim to deter future bad faith.
Can I still win a bad faith claim if the policy has an exclusion?
Yes, if the insurer misapplied or misrepresented the exclusion, failed to investigate, or denied the claim based on an invalid interpretation.
How long do I have to file a bad faith lawsuit?
The time limit varies by state but is generally between one and four years from the date of the denial or bad faith act. Acting quickly is critical.
Does a delay always mean bad faith?
Not always. But if the delay is excessive and unjustified, or if the insurer ignores communications and deadlines, it could be considered bad faith.
Can bad faith apply to group or ERISA life insurance?
Bad faith remedies are typically not available under ERISA policies, which are governed by federal law. However, for individual or non-ERISA group policies, bad faith claims are allowed in many states.
Do I need a lawyer to file a bad faith lawsuit?
Yes. Bad faith litigation is complex and involves contract law, insurance law, and civil procedure. An experienced life insurance attorney can maximize your chances of success.
What if the insurer says the claim is still under review but refuses to pay?
If there is no valid reason for delay, this could constitute bad faith. Insurers are required to promptly investigate and pay valid claims.