An insurance policy is a contract between the insurance company and the policyholder. Generally, if the terms of an insurance policy are clear and explicit, their meaning will be enforced by a court if there is a dispute. The terms are also interpreted according to the reasonable objective expectations of a policyholder.
There are situations when a policyholder, however, may state that the insurance company breached the contract and there are some examples of when this may occur.
The policyholder may state that the contract is unconscionable. This means that the policy contains provisions that are one-sided or extremely in favor of the insurance company. The court may decide, if it finds one or more provisions unconscionable, to refuse to enforce those provisions but may keep the remainder of the agreement in place.
If a policyholder believes that the insurance company used unfair or deceptive advertising practices regarding coverage, he or she may argue that this invalidates the contract. This may also extend to the insurance company’s agents if the agent made representations that the insured person believes are untrue.
Insurance companies are required to act in good faith and with fair dealing, meaning that they must act fairly in handling the insured person’s claims. If the policyholder believes the insurance company denied benefits, delayed payments or paid him or her less than what is owed, the policyholder may claim that the insurance company acted in bad faith.
The policyholder may seek monetary damages from the insurance company for breach of contract and in some cases, may also claim emotional distress.
These are only some examples of claims that may be made against the insurance company. An experienced attorney can provide representation for breach of contract claims.