What is a Bad Faith Insurance Claim Worth?
Understanding Bad Faith Claims
When an insurance company denies a claim unreasonably, delays, or underpays a valid claim, it may be acting in bad faith. Unlike a standard claim, where you only recover the value of your loss, a bad faith claim can result in additional damages to hold the insurer accountable for unfair practices.
Factors That Affect Claim Value
The worth of a bad-faith insurance claim depends on several factors:
- The original claim amount – how much you were entitled to under your policy.
- The severity of financial loss, which includes unpaid bills, repair costs, or replacement expenses.
- Emotional distress – if the insurer’s conduct caused unnecessary stress, anxiety, or hardship.
- Attorney’s fees and legal costs – which may be recovered if you win.
- Punitive damages – awarded in some cases to punish insurers for intentional misconduct.
Compensatory vs. Punitive Damages
There are typically two types of damages in a bad-faith case:
- Compensatory damages: Meant to make you whole by covering the original claim, out-of-pocket expenses, and emotional suffering.
- Punitive damages: Additional amounts the court may award if the insurer acted maliciously or with reckless disregard for your rights. These damages can sometimes be several times higher than the actual loss.
Examples of Payouts
- A homeowner denied storm damage coverage might recover the repair costs plus damages for stress and legal fees.
- A business owner delayed on a commercial insurance payout could receive lost income, attorney fees, and punitive damages if the delay was intentional.
- While amounts vary, settlements can range from thousands to millions of dollars, depending on the harm caused and the insurer’s misconduct.
Why Legal Help Matters
It's important to talk to a lawyer who knows a lot about insurance because bad faith claims include complicated rules and the chance of getting a lot of money. A lawyer can look into whether your insurance company acted improperly, assist you in gathering proof, and fight for the most money possible on your behalf.