Like an individual, each insurance company has a duty of care. According to the law, that duty of care calls for the company’s readiness to demonstrate good faith towards the policy holders. A willingness to deviate from that duty can invite the court’s imposition of punitive damages.
It is a fact that an act of bad faith entails deviating from the expected duty of care. This includes:
• Delaying a payment qualifies as an act of bad faith.
• Denying a claim to a deserving policy holder falls under the designation of bad faith.
• Ignoring a claim might be considered bad faith, although an insurance company might be able to show that such an action had been done mistakenly, rather than intentionally.
An insurance company might use a trick, in order to avoid paying a claimant that was not represented by a lawyer.
Some of the tricks involve adding a bit of inconvenience to the claimant’s life. For instance, the insurance company might lose paperwork. Alternatively, it might demand submission of a large amount of paperwork. An insurer might seek to keep an accident victim from making a claim by presenting the facts of the case in a confusing manner.
A claim might get turned around by charging a claimant with contributory negligence. In the absence of representation, the claimant must accept the charge. Moreover, the size of the insurance company’s required payment gets reduced. Sometimes an insurance company cancels a policy if a policy holder makes a claim. This bold and outrageous action would not prove effective, if the claimant had obtained legal representation.
The common practice of making a low-ball offer at the start of negotiations actually represents the performance of a trick. The claimant does get paid, but the size of that payment is quite small. Moreover, the claimed injuries might later produce complications, which could not be covered.
Some insurance companies use a trick that must be carried-out before the start of negotiations. That trick calls for a lack of action. The insurer does not assign to anyone the job of investigating a claim. The insurer knows that the investigative stage is supposed to precede the stage of negotiations.
Why are such tricks used on a claimant that has not been represented by a lawyer?
When injury lawyers in St. Albert & Spruce Grove see such a trick used on a client, they consider suing the company that has tried to be tricky and deceptive. Lawyers know how to take insurers to court. In a courtroom, the insurance company gets sued for acting in bad faith.
If the client wins the lawsuit, the client gets compensated for his or her losses, and also receives punitive damages. That chain of events illustrates how insurers can get hit with punitive damages.