Our firm is listed in the Best Directory of Recommended Attorneys for the Baltimore and Washington, D.C., region.

Defending against a bad faith insurance claim

On Behalf of | Jun 10, 2025 | Insurance Litigation

Insurance companies have a legal duty to act in good faith. This generally means treating policyholders fairly and promptly responding to claims.

When a policyholder claims you violated this duty, you may face a bad faith insurance claim. The claim might allege that delayed payment, delayed addressing a claim or made an unreasonably fair offer.

A bad faith insurance claim might be filed even if you have acted within your policies guidelines, leaving you to defend your actions. Here are some common defenses that could apply to your situation.

Failure to cooperate

The policyholder has their own duty to cooperate with you. This includes providing you with necessary documents, attending appointments or promptly responding to your attempts at communication.

When policyholders fail to cooperate during the claims process and their claims are denied, the denials are often deemed valid.

Legitimate reason for denial

You must have a reasonable, legitimate basis to deny the claim. Review the policy at issue thoroughly and prepare to point out any exclusions in coverage or the specific policy provision that allows you to deny the claim.

Insufficient evidence presented by the policyholder is another potential defense. The policyholder must provide evidence that allows you to accept their claim.

Fraud or misrepresentation

When you review evidence, including statements made by the policyholder, look for signs of fraud or misrepresentation. If the policyholder lied, covered up key facts or presented false evidence, this could be a valid basis for denial of a claim.

Finally, in disability or health claims, legitimate evidence of a pre-existing condition can serve as a reason for denial. You must show that the condition existed before the insurance policy went into effect.

Addressing a bad faith claim

When you learn you are the subject of a bad faith action, there are various ways to handle it. You may decide to use an alternative dispute resolution method, such as arbitration or mediation to resolve the action. Remember that each case is unique and it is important to investigate the situation and learn your best possible defenses.