What can your insurer do for you? Your insurer’s duty is to act with utmost good faith.
When you take out an insurance policy, you must make full disclosure to the insurer or at least not be caught hiding something that is relevant. Otherwise, the insurer may avoid the policy.
This duty of utmost good faith is a two-way street, and the insurer also owes that duty to you as the insured.
Over the centuries, insurers have been very good at coming up with lots of reasons to refuse to pay out. So much so, that in the long list of people and institutions that judges hate, insurers reached the top of the list centuries ago and have remained there ever since despite stiff competition from mothers-in-law. Hence the reason that insurers often lose court cases.
What is the insurer’s duty of good faith to you in handling your claim:
1. To act honestly and fairly. Your insurer can be mistaken or even negligent but must not act with bad faith e.g. delaying a decision to pay a claim beyond a time that can be reasonably justified.
2. To base a decision to refuse a claim on reasonable evidence and not to avoid making relevant investigations in reaching that decision.
3. Not to use inappropriate reasons to deny a claim such as technicalities that did not impact on the event e.g. minormisrepresentations.
4. To conduct the defence and negotiate settlements with third parties keeping in mind your interests as well as its own.
5. Not to offer you an amount lower than is reasonably due to you knowing that you need the money and cannot afford to sue.
Your insurer is not required to coddle you or sacrifice its business to ensure that you come to no harm. However, it must not stretch the policy’s interpretation to avoid a claim. It must treat you fairly and honestly but if it can avoid the policy it may do so.
In your dealings with your insurer, if you should feel badly done to, you will not be alone.