During bad faith insurance litigation, the main objective is often to reverse an unfavorable insurance determination. However, those affected by the bad faith practices of an insurance provider may also be able to seek additional damages.
One of the ways to increase the amount of compensation received is to make a claim for consequential damages. If the courts rule in favor of a plaintiff, the insurance company may ultimately be responsible for compensating them for not just the value of their initial claim but also the additional damages sustained due to the denied claim.
What are consequential damages?
Failing to uphold contractual obligations, such as approving and promptly paying reasonable insurance claims, can generate numerous secondary losses for individuals and businesses. Consequential damages may include lost business revenue or income, reputation damage and expenses incurred due to the loss of use of a property or certain equipment.
Delays in payment can cause personal and professional setbacks. Especially in cases where an insurance claim relates to an owner-occupied multi-family home or where the property is a residential home where an owner conducts a home business, delays in insurance payments can cause significant consequential damages.
In some cases, policyholders may also be able to request punitive damages. It is often advisable for plaintiffs to maximize the damages they request, as doing so can better address the impact of bad faith insurance practices and help pressure the company to adjust its internal practices.
Reviewing an insurance policy and the challenges generated by a denied claim can help policyholders make appropriate requests during bad faith insurance litigation. Consequential damages are among the losses insurance companies may need to cover if a bad faith insurance lawsuit is successful.