Contractors pay for insurance and expect certain services from their insurance companies in return, especially payment for valid claims. Sometimes insurers don’t act fairly and instead of protecting you, they protect their profits.
In this article, a Nashville construction attorney discusses what it means when insurers act in bad faith.
How Can an Insurance Company Act in Bad Faith?
Some ways insurance companies can act in bad faith:
- Purposely misinterpret their own policy language
- Ask the insured to make extraneous payments
- Fail to conduct a thorough investigation
- Deliberately misunderstand records
- Delay payment unreasonably
- Ignore legitimate claims
In extreme cases, some insurance companies will try to intimidate the policyholder into accepting little to no money for their legitimate claim by using the policyholder’s employment records or past criminal history.
An example of bad faith could be if a contractor was working on a construction site and it was impacted by a flood. The contractor made a claim to their builder’s insurance, because the damage is covered under their policy, and is told not to continue work until an investigation of the damage can be completed. Every day the investigation is delayed the project isn’t getting any closer to being finished. The contractor calls the insurer, but they won’t answer and don’t come out to investigate the site.
Tennessee law includes a penalty for insurance companies that fail to pay legitimate insurance claims. If an insurance company acts in bad faith, in addition to the payment they owe, they can have to pay up to an additional quarter of the costs of the claim that should have been paid.
It’s important to consult with a knowledgeable construction lawyer when you’re considering litigation. Cotney Construction Law can help you get the payment you deserve for your insurance claim. They can assist you in cases involving insurance, construction defects, and disputes.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.