Insurance - Long Term Care - Remedies for Aggrieved Policyholders

 

Sometimes, the holder of a long-term care insurance contract feels that he or she did not get the benefit of his or her bargain with the insurance company. This may result, for example, from provisions that were clearly delineated in the policy, from items that were in the policy but were not well defined, or from the insurance company overstepping its bounds as an insurer. Along these same lines, the most common types of actions brought against insurers by insureds are for breach of contract and breach of the duty of good faith and fair dealing. An attorney skilled in insurance law can help evaluate these and other options as last resorts to resolving conflicts with insurance companies, but a few of the basics are discussed in this article.

 

 

Breach of Contract

 

 

When an insurance company fails to do what it is bound to do under a long-term care insurance contract, it should be liable for breach of contract. Fortunately, law in the United States has evolved in a way that may favor insureds, such as by providing that contractual ambiguities are construed in favor of the insured and that exclusions from coverage are construed narrowly. These rules make sense because insurance companies draft the contracts and are in more of a position of authority than are those insured under those contracts.

 

 

Bad Faith Cases: Breach of the Duty of Good Faith and Fair Dealing

 

 

In every insurance contract, the insurance company has a duty to deal with its insured fairly and in good faith. This is so even if the contract between the parties does not set forth such a duty because it is implied in law. A bad faith claim would be in order, for example, if the duty to pay a long-term care claim was clear from the outset but the insurance company denied the claim.

 

 

The core of a bad faith claim is whether the insurer acted reasonably. If it did not, many states allow juries to assess more extensive damages than in a standard breach of contract suit, including punitive damages.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.