Chapter 3
Avoid the slippery slope…
Avoiding insurance bad faith is paramount for both insurers and policyholders to maintain trust and uphold the integrity of the insurance industry. Insurance bad faith occurs when an insurance company acts dishonestly, unfairly, or unreasonably in handling claims, resulting in harm to the policyholder. For insurers, adhering to the principles of good faith means promptly and fairly evaluating claims, providing clear communication, and honoring the terms of the insurance contract. Policyholders, on the other hand, should provide accurate and complete information when filing claims, understand their policy terms, and cooperate with the insurer's investigation. Committing insurance bad faith not only exposes insurance companies to legal consequences but erodes the trust between insurers and policyholders. By fostering a culture of transparency, fairness, and ethical conduct, both parties contribute to a positive and cooperative insurance relationship, ensuring that claims are processed justly and efficiently.
