An insurance bad faith attorney helps those plaintiffs who believe they were denied insurance coverage improperly. Insurance is a form of protection in which an individual transfers the financial risk of a disaster to the insurance company; the insured pays premiums and in exchange for paying those premiums, the insurance company promises to pay his bills if a given event or calamity occurs. For example, car insurance will pay an insured's claim when a car accident happens, while health insurance will pay an insured's medical bills if he is sick. Insurance companies must act in good faith when reviewing and approving or denying insurance claims, and failure to do so can result in a lawsuit and legal liability.
All insurance companies in the United States must abide by something called the "covenant of good faith and fair dealing." This means that an insurance company has a legal obligation to be fair to its insureds. Fairness involves investigating claims in a reasonable manner and making payments when a given situation is covered under the policy or when the terms of the policy would lead a reasonable insured to suspect that the given situation would be covered. If the insurance company breaches this covenant and acts in bad faith, a tort cause of action is the appropriate action.
An insurance bad faith attorney will represent a plaintiff in the tort cause of action. The insurance bad faith attorney will thus file the lawsuit against the insurance company with the appropriate court system. Most often, the cases are handled in state court since insurance cannot be sold across state lines, and as such the state courts have jurisdiction over the matter.
The insurance bad faith attorney then helps the plaintiff prove his lawsuit against the insurance company. In order to prove such a case, the insurance bad faith attorney must help the plaintiff demonstrate that the insurance company did in fact act unreasonably and unfairly and the plaintiff was damaged as a result. The plaintiff may then be entitled to various damages, including compensation for his actual losses suffered as a result of the company's failure to pay the claim. Punitive damage awards are also common in bad faith claims. These are sometimes large monetary awards in which the insurance company is ordered to pay a sum of money not to compensate the plaintiff but instead to punish the insurance company and deter it or other companies from future bad behavior.