When you purchase insurance, you’re not just buying a policy—you’re entering into a contract based on trust. You expect that if something goes wrong, your insurance company will uphold its end of the bargain and treat you fairly. Unfortunately, that does not always happen. When an insurer unreasonably denies or delays a valid claim, you may have a case for insurance bad faith under South Dakota law.
What Is Insurance Bad Faith?
Insurance bad faith occurs when an insurance company acts unfairly or dishonestly in handling a policyholder’s claim. It goes beyond a simple denial of coverage. Bad faith implies that the insurer intentionally avoided paying a legitimate claim or failed to investigate and evaluate it properly.
Key Elements of a Bad Faith Claim in South Dakota
South Dakota law treats insurance bad faith as an intentional tort, not merely a breach of contract. This means that it involves wrongful conduct that goes beyond simple negligence. As a result, to succeed in a bad faith claim in South Dakota, several elements must be established:
- The existence of a valid insurance contract: You must show that you had a legitimate insurance policy in place at the time of the claim.
- The insurer had no reasonable basis to deny the claim: If the denial was arbitrary, based on inadequate investigation, or contradicted available evidence, it could constitute bad faith.
- The insurer knew or recklessly disregarded the lack of a reasonable basis: It is not enough that the insurer was wrong. They must have acted unreasonably and with knowledge or disregard of their duty to treat you fairly.
South Dakota courts emphasize that bad faith involves more than a disagreement between the parties. The insurer’s behavior must reflect a conscious disregard of your rights as a policyholder.
Examples of Insurance Bad Faith
Bad faith can manifest in various ways. Some common examples include:
- Denying a claim without conducting a proper investigation
- Unreasonably delaying payment
- Offering an unreasonably low settlement
- Misrepresenting the terms of your policy
- Failing to respond to communications on time
- Refusing to explain the reason for denying your claim
- Pressuring you to settle for less than what your claim is worth
However, each case is unique, and what may seem like poor customer service may not meet the legal threshold for bad faith. That is why it’s important to consult with an experienced insurance law attorney who understands the nuances of South Dakota law.
What You Could Recover in a Bad Faith Lawsuit
If you successfully prove bad faith, you may be entitled to compensation beyond the original value of your claim. Courts in South Dakota may award:
- Compensatory damages for financial losses caused by the denial or delay
- Emotional distress damages, especially if the insurer’s conduct caused significant mental or emotional harm
- Punitive damages, in cases where the insurer’s behavior was especially egregious or malicious
Punitive damages are designed to punish the insurer and deter similar conduct in the future. However, they are awarded only in the most severe cases.
Get Legal Help from Abourezk Law Firm
Going up against an insurance company can feel like an uphill battle. However, you do not have to take this fight on your own. At Abourezk Law Firm, we stand up for policyholders who have been treated unfairly and work to hold insurers accountable under South Dakota law.
If you believe your insurance company is acting in bad faith, contact us today for a free consultation. We can help you understand your rights and fight for the full compensation you deserve.