Bad Faith Insurance Law State By State

Originally published by Jeff Raizner.

Insurance bad faith occurs when an insurance company violates its promises to those covered by a policy. In order to protect their profits, insurance companies engage in deceptive practices that breach the carrier’s duty of good faith and fair dealing; these practices violate state law in most states. The National Association of Insurance Commissioners published the Unfair Claims Settlement Practices Act (referred to as “UCSPA”), which has been adopted in the vast majority of states with each state codifying its provisions. A few examples of state statutes enacting all or part of the UCSPA include:

• Alaska Stat. § 21.36.125 (1976)
• Ins. Code Ann. §§ 542.001 to 542.014 (2005)
• Y. Ins. Law § 2601 (1984)
• Stat. Ann. § 26-13-124 (1986)

Insurance departments in every state regulate insurance companies and their business activities. Legislatures have enacted statutes and courts have rendered decisions that define the standards companies must adhere to when dealing with their insured. The legal protections and remedies available to insured parties harmed by bad faith conduct by insurers vary widely from state to state. Our experienced insurance recovery lawyers have handled insurance lawsuits across the United States against all major insurance carriers.

Damages Available In Insurance Recovery Lawsuits

In many states, a plaintiff bringing an insurance recovery claim can secure both compensatory damages and punitive damages. Compensatory damages are meant to make up for the insured’s losses resulting from the bad faith, while punitive damages are meant to punish the insurer for its wrongful conduct. Awards of punitive damages can be significant, sometimes exceeding compensatory damages; however, there are constitutional limits on these awards. Some state laws also provide for statutory damages, which are also usually an amount larger than the actual losses suffered by the plaintiff.

Our friends at United Policyholders (UP) put together a wonderful resource to detail the differences in bad faith insurance protection from state to state: “50 State Survey of Bad Faith Laws and Remedies.” To find out what the law is in your state and what damages may be available should you prove bad faith on the part of an insurance carrier, be sure to read UP’s guide.

Bad Faith Insurance Lawyers

The insurance recovery lawyers at Raizner Law have extensive experience working with clients who have been underpaid, paid late, or wrongfully denied by their insurance companies. We have succeeded in recovering what our clients were entitled to under their policies, so let us help you, too. To discuss your situation with our team of trusted experts, contact us today for a free consultation.

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