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When an insurance company denies a claim without adequate investigation of the facts or denies a claim without a justifiable reason, the company is liable for bad faith. The person who’s claim was denied can recover compensatory and punitive damages in a bad faith action. The compensatory damages are usually the amount that should have been paid on the claim, with interest. The punitive damages are in an amount within the jury’s discretion and are awarded to punish the defendant and to deter such conduct in the future. During a recession such as we are in now, some insurance company profits may be lower because the company may not be getting as great a return on the premiums it invests in things such as shopping centers and other businesses. This situation gives insurance companies an incentive to deny claims they should have paid, or to unduly delay paying claims. At least one consumer organization suggests that this is causing an increase in insurance bad faith. Our firm sees more bad faith cases involving life insurance and disability insurance than any other types. An example is the failure of a disability insurance company to pay a claim when two of the plaintiff’s treating physicians reported that she was totally disabled. The insurance company denied the claim on the basis of sending the plaintiff’s medical records to a physician they regularly hire to look at records and state that the claimant is not totally disabled. The doctor they hired had never seen or treated the plaintiff. An example of bad faith with regard to a life insurance claim we handled involved the denial of death benefits to a widow on her husband’s life insurance policy. The company claimed the policy was not in effect at the time of her husband’s death, although they paid the premiums up to the time of his death and even after, and all of the premiums were accepted either by the insurance company or its agent. People pay their hard earned money to insurance companies so that when they suffer a loss within the policy they can get paid. Unfortunately, some insurance companies and adjusters just don’t want to honor their commitments. Thankfully we have trial by jury and citizens who will force them to honor those commitments.