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If you have been denied an insurance claim or suffered from delays or issues with a claim, you might be wondering, “What is insurance bad faith in New Mexico?” An insurance bad faith claim might exist when an insurer unreasonably refuses to investigate, evaluate, or pay a covered claim.
Understanding how New Mexico law handles these cases can help you understand your legal options.
Insurance Bad Faith in New Mexico
Insurance companies are required to treat policyholders fairly when investigating, evaluating, and processing claims. Insurance bad faith may arise when an insurer unreasonably delays, denies, investigates, or otherwise mishandles a covered claim.
An insurance company may have legitimate reasons for denying coverage, such as a lack of evidence or a valid exclusion under the policy. Even still, the insurer must act reasonably and in good faith under the circumstances. Policyholders may have legal remedies if an insurer acts in bad faith. The facts of each case, the terms of the insurance policy, and the insurer’s conduct during the claims process will determine whether bad faith has occurred.
Common Examples of Insurance Bad Faith
Insurance companies are obligated to properly investigate and process claims in a fair and timely manner. When an insurer fails to meet its legal obligations during the claims process, its conduct may constitute insurance bad faith depending on the facts of the case. Some common examples of insurance bad faith include:
- Unreasonably delaying the investigation or payment of a valid claim
- Denying a covered claim without first conducting a reasonable investigation
- Misrepresenting policy terms or coverage provisions
- Failing to promptly respond to communications from the policyholder
- Refusing to provide a reasonable explanation for a claim denial or payment decision
- Offering an unreasonably low settlement without adequately evaluating the claim
- Ignoring relevant evidence that supports coverage under the policy
- Failing to properly investigate facts before denying or limiting a claim
Proving an Insurance Bad Faith Claim
Proof of an insurance bad faith claim often requires more than evidence that the claim was denied. Policyholders are sometimes required to provide additional evidence that the insurance company acted unreasonably in processing the claim. This might include the insurance policy, a copy of the claim form, correspondence with insurance adjusters, denial letters, an inspection report, payment records, and other evidence of unnecessary delay or changing explanations.
Witness testimony and professional opinions can be used in some cases. Keeping records during the claims process may help a policyholder establish what happened and whether the insurer met its legal duties.
Compensation Available in an Insurance Bad Faith Claim
Available damages in an insurance bad faith case depend on the facts and the nature of the harm suffered by the policyholder. A claimant in certain situations may pursue recovery of benefits owed under the insurance policy and other losses suffered because of the insurance company’s behavior.
Additional damages may be available depending on the facts and circumstances, subject to New Mexico law, and depending on the evidence presented in the case. The damages available in each case depend on the policy language, the conduct of the insurer, and the losses caused by the bad faith.
Hire an Insurance Bad Faith Lawyer
Insurance claims are often complex, with issues including policy language, claim investigations, and negotiations with insurers. At Berenson & Associates, PC, our Albuquerque personal injury attorney have years of experience representing New Mexico clients with insurance and personal injury claims.
We review insurance policies, claim files, communications with insurers, and other available evidence to determine whether an insurer may have acted in bad faith. We then work to protect our clients’ rights throughout the claims process and any resulting litigation.
FAQs
Can I File an Insurance Bad Faith Claim if My Claim Was Eventually Paid?
Acceptance of payment does not necessarily preclude an insurance bad faith claim. A policyholder may still have a cause of action if, for example, the insurer unreasonably delayed payment or otherwise acted unfairly in the handling of a claim, subject to the facts of a case. In New Mexico, NM Stat. Ann. § 59A-16-20 et seq. prohibits certain unfair claims practices, such as not acknowledging or responding in a timely manner to communications about claims.
Can I Report an Insurance Company Before Filing a Legal Claim?
You may file a complaint against an insurer with the New Mexico Office of Superintendent of Insurance if you believe an insurer has acted improperly, either in addition to or in lieu of filing a legal claim. A regulatory complaint will not automatically settle a dispute but may result in a review of the insurer’s actions. Depending on the circumstances, it may be beneficial to consult an attorney about your legal options while the complaint is being reviewed.
How Common Are Insurance Consumer Complaints?
Insurance consumer complaints are frequent enough that the National Association of Insurance Commissioners (NAIC) has a nationwide database of insurance consumer complaints it maintains with information reported to it by state insurance regulators. NAIC has found that private passenger auto insurance accounts for 35.18% of all closed, confirmed insurance complaints, the largest single category. Complaint information can be used by regulators to identify patterns of insurer conduct.
Where Are Insurance Bad Faith Legal Claims Filed in New Mexico?
In New Mexico, a bad faith claim against an insurer is usually filed in the court with subject matter and personal jurisdiction over the claim, which varies depending on the amount in controversy and other legal factors. For instance, a bad faith action brought in Albuquerque might be heard in the Second Judicial District Court of New Mexico. In the 2024 reporting period, the NAIC noted that direct written premiums for private passenger auto insurance averaged around $344.1 billion nationwide.
New Mexico Bad Faith Insurance Lawyer
Insurance companies have a legal obligation to deal fairly with their policyholders in the claims process. When an insurer’s conduct seems to be in bad faith, the legal team at Berenson & Associates, PC can examine your circumstances, clarify your legal choices, and guide you in seeking the compensation and other remedies available under New Mexico law. Schedule a consultation today to hire an Albuquerque insurance bad faith lawyer.
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