Bad Faith Risks For Insurance Companies

One of the costliest risks for insurance companies is the threat of being found guilty of bad faith in lawsuits. Per (Richmond pg 749), “insurers that are found to have committed bad faith face potentially significant compensatory damages and depending on the facts, may be found liable for punitive damages.” Indeed, an insurance company can be found in bad faith if evidence can be found to support that the company actively sought to deceive or use misleading methods to reduce or deny claims to a rightful claimant. One way to guard against this risk is a rigorous system in place to make sure that employees are engaging in ethical and fair claim processes. Another useful process would be to study and research past cases of bad faith findings and implementing measures to avoid the risks outlined in the cases.

Works Cited

Richmond, Douglas R. .. “Recurring Discovery Issues in Insurance Bad Faith Litigation.” Tort Trial & Insurance Practice Law Journal, vol. 52, no. 3, Spring/Summer2017 2017, pp. 749–806. EBSCOhost, search.ebscohost.com/login.aspx?direct=true&db=lgs&AN=125327445&site=eds-live.

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