When you purchase an insurance policy, you expect that the insurer will honor its contract by covering any valid claims you may have. But insurers sometimes try to avoid paying out the full amount of an insured’s losses by asserting questionable defenses and using other unfair tactics. When an insurance company fails to make realistic settlement offers or to negotiate fairly, there may be grounds for you to pursue a bad faith claim.

The Connecticut Unfair Insurance Practices Act (CUIPA) prohibits certain types of insurer action or inaction, which include the following:

• Arbitrary claim denial — The insurer fails to provide a reasonable explanation for denying a claim.
• Excessive delay — The insurer fails to promptly settle a claim when liability is reasonably clear under the policy.
• Low settlement offer — The insurer offers substantially less than what a claim is worth as measured by the amounts paid in similar cases.
• Rejection of a good faith offer — The insurer does not accept your offer to settle the claim for a fair amount that is within the policy limits.
• Policy cancelation — You file a claim and the insurer responds by canceling your policy.
• Inadequate investigation — The insurer rejects a claim without fully investigating it.
• Failure to communicate — The insurance company doesn’t respond to your inquiries or doesn’t inform you of the progress of your claim.

A pattern or practice of violating the CUIPA can subject an insurance company to regulatory sanctions. Although the CUIPA does not create a private cause of action, violations are frequently cited in support of bad faith claims.

If you suspect your insurer is acting in bad faith, you have legal remedies available under Connecticut law. Possible causes of action include these:

• Breach of contract — An insurance policy is a contract between you and the insurer. The company may be in breach if it refuses to pay a valid claim or otherwise to fulfill its obligations.
• Breach of implied covenant of good faith — Connecticut’s Uniform Commercial Code requires that every contract, including an insurance policy, is subject to an implied covenant of good faith in its performance. An insurer that doesn’t compensate a policyholder adequately can be held in breach of that covenant.
• Unfair trade practices — You might have a cause of action if your insurance company has repeatedly acted improperly toward policyholders. The challenge in these cases is to prove that the company has behaved badly towards many insureds, not just you.

The very fact that you need to file a lawsuit to collect what you are owed may be evidence of insurer bad faith. A qualified Connecticut litigation attorney can evaluate and pursue any cause of action available.

If you believe you are being mistreated by an automobile or home insurer in Connecticut, contact the lawyers of Gesmonde, Pietrosimone & Sgrignari, L.L.C. for a consultation at our Hamden or East Haven office. Call us at 203-745-0942 or contact us online anytime.