Bad faith claims arise when an insurance company unfairly delays, denies, underpays, or refuses to properly handle a legitimate claim under an insurance policy, even though the policyholder paid premiums and followed the insurance contract's terms. Many policyholders feel stressed, frustrated, and financially overwhelmed when an insurer fails to act with good faith and fair dealing during the claims process, especially after serious accidents, property damage, or medical emergencies.
Paul Robinson Law Personal Injury & Car Accident Lawyers helps people in Raleigh and across North Carolina hold insurance companies accountable when bad faith conduct affects their lives, finances, and peace of mind.
Our legal team works hard to protect policyholders from unreasonable claim denials, lowball settlement offers, delayed payments, and unfair practices that insurance adjusters and insurers sometimes use to avoid paying valid claims, so call 919-438-0065 today for a free consultation and immediate help with your bad faith insurance claim.
A bad-faith insurance claim occurs when an insurer fails to treat a policyholder fairly, honestly, and reasonably during the claims process, even though the insurer has a legal duty to act in good faith and with fair dealing under state laws and insurance contracts.
Insurance bad faith may happen when an insurer denies a valid claim without a reasonable basis, delays payment, refuses to promptly investigate, ignores evidence, misrepresents policy language, or makes unreasonable demands to avoid paying compensation owed under the insurance policy.
Not every claim denial is considered bad faith, because some denied claims may have legal support under the policy; insurer bad faith exists when the insurer's conduct becomes dishonest, unfair, deceptive, or unreasonable under the law.
Insurance companies have a legal duty of good faith and fair dealing when handling claims made by policyholders under insurance contracts. This means the insurer must investigate the claim fairly, review relevant facts honestly, communicate clearly, and avoid unfair practices designed to delay or deny compensation.
When an insurer breaches this duty by acting unfairly or refusing to accept a legitimate claim without a reasonable basis, that conduct may constitute bad faith under North Carolina law. Insurance companies cannot place profits above policyholders' rights simply to avoid paying benefits owed under coverage.
| Type of Claim | Description |
|---|---|
| First-party bad faith | First-party bad faith occurs when a policyholder files a claim directly with their own insurance company for benefits under their policy, such as homeowners' insurance, health insurance, or auto insurance. |
| Third-party bad faith | Third-party bad faith occurs when an insurer fails to protect its insured during a liability claim against another injured party, especially when the insurer refuses a fair settlement offer within policy limits. |
| Common example | A first-party example may involve denying a claim after storm damage. In contrast, a third-party example may involve refusing to settle a lawsuit that later results in a large verdict against the insured person. |
| Main issue | Both categories involve bad faith conduct, unfair dealing, and failure to act reasonably during the claims process. |
Insurance companies owe legal duties to policyholders because insurance policies are contracts built on trust, fair dealing, and public policy principles. The insurer's duty includes reviewing claims honestly, promptly investigating losses, explaining claim denial decisions, and fairly evaluating evidence supporting a policyholder's claim.
When an insurance company fails to meet these duties or acts in a way designed to avoid paying a valid claim, policyholders may have legal options, including filing a lawsuit for bad faith and seeking compensation for losses caused by the insurer's conduct.
North Carolina bad-faith insurance claims are governed by common law principles, state laws, and insurance regulations that require insurers to act fairly throughout the claims process. These laws protect policyholders from unfair practices, unreasonable claim denials, and dishonest insurance company conduct while giving injured people the right to pursue legal action against insurers that fail to honor their obligations under insurance contracts.
North Carolina common law recognizes that insurance companies must act in good faith and with fair dealing when handling policyholders' claims. An insurer breaches this duty when it intentionally delays payment, ignores evidence, refuses to investigate, or denies a legitimate claim without a reasonable basis.
Courts may allow policyholders to recover compensation when bad-faith actions cause financial harm, emotional distress, or other damages arising from the insurance company's conduct.
North Carolina state laws prohibit insurance companies from using unfair claims settlement practices during the claims process. These rules require insurers to promptly investigate claims, communicate honestly, and fairly review evidence before denying or delaying payment.
Insurance bad faith may exist when insurers misrepresent policy language, refuse to pay without investigation, fail to explain claim-denial decisions, or pressure policyholders to accept a low settlement offer.
Under N.C. Gen. Stat. Under § 75-1.1, policyholders may sue insurance companies for unfair and deceptive trade practices related to bad-faith insurance conduct. This law applies when an insurance company's conduct becomes deceptive, dishonest, or unfair in handling a claim.
A violation may occur when an insurer intentionally delays payment, misrepresents coverage, or acts unfairly to avoid paying benefits owed under the insurance policy. Policyholders who win these claims may recover compensation and additional damages under North Carolina law.
N.C. Gen. Stat. § 58-63-15(11) identifies several unfair practices that insurance companies must avoid during the claims process. These prohibited actions include refusing to promptly investigate claims, failing to explain claim denial decisions, misrepresenting facts, and delaying fair payment without a reasonable basis.
When insurers repeatedly engage in these bad-faith practices, policyholders may use the law as evidence in a lawsuit against the insurer.
Insurance bad faith can happen in many different ways when an insurer places profits ahead of fairness, honesty, and the policyholder’s rights under an insurance policy. Many bad-faith claims involve unfair delays, dishonest communication, or efforts to avoid paying compensation owed to injured people and their families.
Some of the most common examples of insurer bad faith and unfair claims handling that may justify legal action against an insurance company include:
If you suspect bad faith after dealing with an insurance adjuster or insurer, call Paul Robinson Law Personal Injury & Car Accident Lawyers at 919-438-0065 for a free consultation and immediate help understanding your legal options.
First-party and third-party bad faith claims both involve unfair insurance company conduct, but they apply to different situations involving coverage and liability. Understanding the difference matters because the insurer's duty varies depending on whether the policyholder seeks benefits directly under the policy or whether another person files a liability claim against the insured.
First-party claims happen when policyholders seek compensation directly from their own insurance company under coverage they purchased. These claims may involve homeowners' insurance, health insurance, disability insurance, or auto insurance benefits.
First-party bad faith exists when the insurer unfairly delays, denies, or underpays a legitimate claim without a reasonable basis.
Third-party claims involve situations in which another person seeks compensation from the insured for injuries or damages. The insurance company must defend the insured and handle settlement negotiations fairly under the liability coverage portion of the insurance policy.
Third-party bad faith may occur when the insurer places its own financial interests above the insured's protection.
Insurance companies may act in bad faith when they refuse to settle a lawsuit within policy limits even though liability is clear and damages are serious. If the case later results in a verdict above policy limits, the insured person may suffer major financial harm.
Courts may hold the insurer responsible when an unreasonable refusal to settle causes avoidable losses.
During liability claims, insurers must investigate fairly, review evidence honestly, communicate settlement opportunities, and avoid exposing policyholders to unnecessary financial risk. Insurance companies cannot ignore clear evidence simply to avoid paying compensation.
When insurers fail to meet these duties, policyholders may have the right to file a lawsuit for bad faith claims.
Policyholders harmed by insurance bad faith may recover several types of compensation depending on the facts of the case, the financial losses involved, and the insurer's conduct during the claims process. North Carolina law may allow recovery for unpaid policy benefits, emotional distress, attorneys' fees, punitive damages, and other losses resulting from unfair insurance company conduct.
Policyholders may recover unpaid benefits that the insurance company should have paid under the insurance policy. These damages often include medical expenses, property losses, lost income, or liability coverage benefits connected to the claim.
Courts may require insurers to pay compensation that was unfairly withheld.
Bad faith conduct may cause additional financial losses beyond the value of the original claim. A delayed payment may lead to missed bills, damaged credit, business losses, or foreclosure risks.
Policyholders may seek compensation for these additional damages caused by the insurer's failure to act fairly.
Insurance bad faith can create serious emotional distress, anxiety, frustration, and mental suffering, especially when policyholders face financial pressure after accidents or disasters. Courts may allow recovery when the insurance company's conduct causes significant emotional harm.
This is especially common when insurers intentionally delay payment or ignore urgent claims.
Some bad-faith claims may allow policyholders to recover attorneys' fees and litigation costs incurred in pursuing legal action against the insurance company. These costs can become important when insurers force people into lengthy lawsuits to recover compensation owed under the policy.
A bad-faith insurance attorney may handle some cases on a contingency fee basis, meaning clients pay no attorney fees unless compensation is recovered.
Under N.C. Gen. Stat. § 75-16, courts may award treble damages when bad faith conduct also violates North Carolina’s unfair and deceptive trade practices laws. Treble damages allow a court to triple the amount of compensation awarded to the injured policyholder.
This law exists to discourage unfair practices and protect the public from dishonest conduct by insurance companies.
Punitive damages may be available when an insurer’s actions are especially reckless, intentional, or deceptive. These damages are designed to punish serious bad-faith conduct and discourage similar conduct in the future.
Courts may consider whether the insurer acted dishonestly, ignored evidence, or intentionally attempted to avoid paying a valid claim.
Yes. An insurance company can be sued for delaying a claim when the delay becomes unreasonable, unfair, or part of a pattern of bad faith conduct under North Carolina law. Insurers must promptly investigate claims, review evidence honestly, and communicate with policyholders in good faith.
A delay may constitute bad faith when an insurer intentionally ignores evidence, fails to explain delays, refuses to communicate, or drags out the claims process to pressure a policyholder into accepting less compensation. However, not every delay automatically proves bad faith because some claims require additional investigation.
If you suspect bad faith because an insurance company fails to handle your claim fairly, call Paul Robinson Law Personal Injury & Car Accident Lawyers at 919-438-0065 for a free consultation.
Bad-faith claims can be harder to prove when policyholders make mistakes during the claims process or fail to protect key evidence related to their case. Insurance companies and insurance adjusters often seek to challenge claims, reduce compensation, or argue that the insurer acted reasonably under the circumstances.
To protect your rights and strengthen your bad faith insurance claim, it is important to avoid several common mistakes that may damage your case or make it easier for an insurer to deny responsibility:
A bad-faith insurance lawyer can protect policyholders when insurance companies engage in unfair practices, deny valid claims, or refuse to deal honestly throughout the claims process. Insurance laws, policy language, and legal procedures can become difficult for injured people already dealing with financial pressure and emotional distress.
Paul Robinson Law Personal Injury & Car Accident Lawyers helps level the playing field against large insurance companies by gathering evidence, reviewing insurance contracts, challenging unfair conduct, and fighting for full compensation under North Carolina law. Our legal team understands how insurers operate, and we work aggressively to protect our clients against bad-faith actions.
What should I do if I suspect bad faith on the part of an insurance company?
Keep detailed records, save all communication, gather evidence, and contact a lawyer immediately to review your legal options.
Can I sue an insurer for denying a claim?
Yes, you may file a lawsuit if the insurer denies a legitimate claim without a reasonable basis or engages in unfair practices.
Does every denied insurance claim qualify as bad faith?
No. Not every claim denial qualifies as insurance bad faith because the insurance policy and relevant facts may legally support some denials.
Bad faith claims can leave families dealing with unpaid bills, emotional distress, financial pressure, and unfair treatment from an insurance company that should have acted with honesty and good faith. Still, Paul Robinson Law Personal Injury & Car Accident Lawyers fights for policyholders throughout Raleigh and North Carolina by holding insurers accountable for bad-faith conduct, unfair claim denials, delayed payments, and unreasonable settlement tactics.
Call 919-438-0065 today for a free consultation and let our experienced legal team help you pursue the compensation and justice you deserve.
Paul Robinson Personal Injury & Accident Lawyers - Apex
Address: 800 W Williams St #250 Apex, NC 27502
Paul Robinson Personal Injury & Accident Lawyers - Clayton
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Address: 124 St Mary's St Ste 201, Raleigh, NC 27605
