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When an insurance company won’t uphold a business policy

Securing the right insurance coverage is as important for a business as it is for the head of a household. Those helping start or operate companies may require a variety of different types of insurance coverage. For example, companies that make their facilities open to the public likely need premises liability coverage in case of visitor gets hurt.

Businesses that turn out products may need recall insurance or product defect coverage. There is professional errors and omission coverage in case a real estate agent gives a client inaccurate advice and even business interruption insurance to cover fixed costs in case a company must suddenly cease operating for reasons outside of its control.

Businesses carry that coverage to mitigate operational risks and help to ensure the company’s ongoing solvency even after something unexpected happens. With that said, even insured parties aren’t guaranteed a favorable outcome if something goes wrong. What if an insurance provider doesn’t uphold a policy protecting a company?

The policy may provide some answers

Sometimes, those tasked with securing insurance coverage for a business focus more on cost than policy terms. They may have unknowingly agreed to a policy that has limitations on coverage that could complicate claims. It is, therefore, typically necessary to review the actual policy paperwork to establish if the coverage applies and how much compensation the business could be able to secure. That information is crucial if a policyholder needs to take legal action.

A lawsuit could be necessary

Unfortunately, simply reviewing a policy to validate someone’s belief that there should be coverage isn’t automatically enough to get an insurance company to pay a claim. Even if someone is confident that the policy applies to their situation, their insurance company may continue to stonewall them and deny coverage.

If a business needs coverage and wants to hold an insurance company accountable for what is essentially a breach of contract, it may be necessary to pursue bad faith insurance litigation. Should the courts agree that the insurance provider acted in bad faith, the policyholder could be eligible not just for the approval of their claim but possibly also for damages awarded by the courts.

Insurance bad faith might include intentionally deceiving the policyholder or openly refusing to uphold the terms of a policy. Even inappropriately extended claims processing could constitute bad faith insurance practices, as it may be a way of trying to wait out the business until it fails.

Those who recognize that insurance companies may be liable when they won’t uphold the policies that they underwrite may be able to take appropriate action when facing claims denials that could endanger the financial future of an organization. For many, taking timely action when facing bad faith insurance issues can make a major difference for organizations that are facing certain kinds of unexpected and unfair challenges.