Understanding Third-Party Bad Faith Insurance Claims

January 18, 2022

Navigating insurance claims on your own can be difficult, especially when an insurance company acts in bad faith.

An insurance company has a fiduciary duty to act in good faith and fairness when dealing with its insured (or policyholder).  When an insurance claim is filed against its insured for their negligence in an accident, the insurance company must protect its insured and keep them updated on the claim. The best way to protect the insured is to settle the claim within the policy limits in a timely manner.  This saves their insured from the stress and embarrassment of litigation and trial.  If the case does go to trial and a verdict is rendered in excess of the policy limits, their insured is on the hook for payment.

Anyone involved in a personal injury claim would hope that insurance companies fulfill their role in providing adequate and truthful representation.  Unfortunately, that is not always the case. To explain further, here are some ways the insurance company could act in bad faith:

  • Trying to settle the claim for significantly less than its value
  • Failing to communicate with the insured party that there is an offer to settle
  • Failing to fully investigate the claim
  • Denying the claim outright
  • Taking an unreasonable amount of time settling negotiations or unnecessarily stalling 
  • Making a counteroffer that is contrary to the terms of the original offer to settle

Simply put, a third-party bad faith claim occurs when an insurance company fails to settle a legitimate claim within the applicable limits of the insurance policy. When an insurance company fails to reach a settlement within the policy limits, the insured (the policyholder) becomes exposed to personal liability.

Remember, insurance companies must uphold these responsibilities to their policyholders. They are required by law to look for ways to pay legitimate claims and pay the claim within a reasonable timeframe. If an insurance company fails to settle, leaving you on the hook for the damages, you may have a claim that could entitle you to compensation.

If you believe your insurance company has acted in bad faith,

Dawson Law Firm is here to help.

You need the assistance of an experienced attorney to help you resolve your case. Dawson Law is here to support you every step of the way. As your attorney, we will ensure that insurance companies meet their obligations and that you receive the compensation you are entitled to. 

Call Dawson Law Firm at 314-701-7373 today for a free consultation.


Dawson Law Firm, LLC.
Licensed in Missouri




Dawson Law Firm, LLC.
222 S. Central Ave. Ste.1100. St. Louis, MO 63105

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