In North Carolina like many other states, the law requires insurance companies to treat people fairly. When an insurance company acts unfairly, deceptively, or puts its own profit ahead of the rights of its policyholders in a manner that is unlawful, it is called bad faith. An insurance company that is sued for bad faith in North Carolina could be made to pay to the policyholder all amounts due under the policy, as well as punitive or multiple damages and other relief. A qualified North Carolina lawyer can help you understand and protect your rights if an insurance company has acted in bad faith toward you.
Types of Bad Faith
There are two ways that an insurance company can be held accountable by a policyholder for bad faith under North Carolina law.
The first way is under a written law, or statute, that was passed by the legislature and signed by the governor. The law is called the Unfair and Deceptive Trade Practices Act. An insurance company is guilty of unfair and deceptive trade practices if it harmed you by doing something that has tendency to deceive, that offends public policy, or that is immoral, unethical, oppressive, unscrupulous, or substantially hurts people. North Carolina law also includes a list of insurance practices that are automatically considered to be unfair and deceptive. This list includes false advertising, coercion, discrimination, lying about important facts or policy terms, refusing to pay claims without an investigation, and unreasonably forcing a lawsuit without attempting to settle with the policyholder.
The second way an insurance company can be held accountable for bad faith is under the history of court opinions where North Carolina courts found insurance companies responsible for wrongdoing. This is judge-made law, also called common law. An insurance company can be responsible for bad faith under the common law if it refuses to pay policy benefits after receiving and recognizing a valid claim, if it acts in consideration of its own interests and disregards the interests of the policyholder, and if there is other aggravating or outrageous conduct by the insurance company that harms the policyholder.
Consequences of Bad Faith
An insurance company that has committed bad faith in North Carolina can face very serious consequences. The policyholder may be entitled to all of the amounts due under the policy, as well as punitive or multiple damages. The insurance company may also be required to pay the policyholder’s attorney’s fees and other amounts such as pre- and post-judgment interest. All of these things can add up in some cases to millions of dollars, when the bad faith was especially bad and it caused extremely serious harm.
If you believe an insurance company has wrongfully denied policy benefits to you in a manner that was unfair, deceptive, or outrageous in any way, you should consult a qualified lawyer to consider your options. Insurance companies are very sensitive to being accused of bad faith. A qualified lawyer may be able to help you get the policy benefits you deserve, and if the insurance company does not give in, there could be potential for you to recover punitive or multiple damages through a lawsuit.