Your insurance company has been collecting your premiums for years, and now it is refusing to pay a valid claim or dragging out the process to wear you down. This kind of bad faith conduct is not just frustrating; it may be illegal.
Lance Bingham helps Utah policyholders fight back against insurance companies that act in bad faith. Call 801-477-8346 today for a free case evaluation.
An insurance bad-faith claim is a legal action brought against an insurance company for unreasonably denying, delaying, or mishandling a legitimate claim. Insurance companies engage in unfair practices more often than most people expect, and policyholders have the right to fight back.
Every insurance policy carries an implied duty of good faith and fair dealing, meaning the insurer must handle your claim honestly. When an insurer breaches that duty, you may need a bad faith insurance attorney to help you recover what you are owed.
The duty of good faith and fair dealing is an implied legal obligation written into every insurance contract. It requires the insurance company to investigate claims promptly, communicate honestly, and pay valid claims without unreasonable delay.
Under Utah law, established by Beck v. Farmers Insurance Exchange, 701 P.2d 795 (Utah 1985), an insurer that breaches this duty may be held responsible for damages that go beyond the original policy limits.
Bad-faith claims fall into two categories depending on whom the insurance company is dealing with.
| First-Party Bad Faith | Third-Party Bad Fait | |
| Who Is Involved | Your own insurer mishandles your claim | Your insurer fails to protect you from a claim brought by someone else |
| Common Example | Insurer denies your uninsured motorist claim without reason | Insurer refuses to settle a lawsuit within your policy limits, exposing you to a personal judgment |
| Legal Basis | Breach of the implied covenant of good faith and fair dealing (contract-based in Utah) | Breach of the insurer's fiduciary duty to protect your interests |
| Damages Available | Policy benefits owed plus consequential damages | Excess judgment above policy limits, consequential damages |
Insurance companies engage in bad faith in several ways.
Some of the most common bad faith practices that can support a legal claim are:
Proving bad faith requires showing both that your claim was valid and that the insurer handled it unreasonably. The sections below explain what that standard looks like in practice.
To pursue a bad faith case, you first need to show that your underlying claim was legitimate and covered under the policy terms. Without a valid claim, there is no foundation for a bad faith lawsuit.
The core of a bad faith claim is proving that the insurance company's conduct was unreasonable under the circumstances. Courts look at whether the insurer had a legitimate reason for its actions and whether it followed its own procedures. They also consider whether the insurer would have handled the claim the same way if money were not a factor.
Strong evidence is what separates a bad faith case that settles quickly from one that drags on. The clearest evidence includes written communications between you and the insurer, the insurer's internal claim notes, and a timeline showing how long each step of the process took compared to what is reasonable.
Internal claim handling records, including adjuster notes, supervisor approvals, and internal communications, often reveal the true reason an insurer denied or delayed a claim. These records can show whether the insurer knew the claim was valid but still denied it, which is among the most powerful pieces of evidence in bad-faith cases.
If you think your insurer is acting in bad faith, call Lance Bingham at 801-477-8346. Our team knows how to request and analyze these records and use them to build your case.
Car accidents are among the most common situations in which insurance bad faith arises. The following scenarios illustrate when an insurer's conduct crosses the line from a dispute into a bad-faith claim.
When the driver who hit you has no insurance or not enough coverage, you file a claim with your own insurance company under your uninsured or underinsured motorist coverage. Your own insurer then has a duty to handle that claim fairly. Denying or undervaluing those claims without a legitimate basis is one of the most common forms of bad faith after a car accident.
Insurance companies often contest liability even when the evidence is clear. When an insurer denies or drastically reduces a settlement offer simply because it disputes fault, and does so without conducting a proper investigation, such conduct can support a bad-faith claim.
An insurer that sits on a claim for weeks or months without explanation, or that waits until just before trial to make a reasonable settlement offer, may be acting in bad faith. Utah law requires insurers to act within a reasonable period once liability is reasonably clear.
When an insurer's valuation of a claim is far below what medical bills and lost wages actually show, that low offer can be evidence of bad faith. This is especially true when the insurer cannot provide a reasonable explanation for its numbers.
A successful bad faith claim can recover more than just the amount originally owed under the policy. The following types of compensation may be available depending on the facts of your case.
The starting point in any bad faith case is recovering what the insurer should have paid in the first place. This includes the full value of the original claim the insurer wrongfully denied or underpaid.
Under Utah law, consequential damages are available when an insurer breaches the implied covenant of good faith and fair dealing. These can include additional financial losses you suffered because the insurer failed to pay claims promptly, such as out-of-pocket medical costs or missed loan payments.
When an insurer's conduct causes significant emotional distress, those damages may also be recoverable. This is more common in first-party bad-faith cases, where the insured was left without the policy benefits they needed during recovery.
In appropriate cases of bad faith, courts may award attorney's fees and litigation costs to the policyholder. Being forced to hire an attorney to collect what you were already owed is itself a harm caused by the insurer's bad faith conduct.
Utah courts allow punitive damages in bad faith cases where the insurer's conduct rises to the level of fraud, malice, or willful misconduct. A simple coverage dispute typically does not reach this threshold, but egregious bad-faith conduct can support such a claim.
The strength of a bad-faith case depends heavily on the documentation.
Here is the evidence that tends to make the biggest difference in these claims:
In Utah, a bad faith claim based on a written insurance contract is generally subject to a six-year statute of limitations under Utah Code § 78B-2-309. If your claim also involves a tort theory, such as intentional infliction of emotional distress, a shorter deadline may apply. In some situations, that window is as short as two or three years.
Waiting too long creates serious risks beyond the filing deadline. Evidence disappears, witnesses forget details, and insurance records may no longer be available. Early legal action preserves your ability to build a strong case.
A bad faith case against an insurance company is not like filing a simple claim. Insurers have legal teams whose job is to defend these disputes, and our attorneys at Lance Bingham know how to push through those defenses.
When your insurance company refuses to pay what it owes, you should not have to face that fight alone. Lance Bingham represents Utah policyholders who have been mistreated by their insurers, and we are ready to put that experience to work for you.
Call 801-477-8346 today to speak with our team and get a free case evaluation with no obligation.
Dustin specializes in serious accident and injury cases in Utah and Idaho, practicing in State and Federal Courts. He's recognized as "Utah's Legal Elite," a "Mountain States Rising Star," and a member of The National Trial Lawyers Top 100. He holds an Avvo Superb Rating and is actively involved in legal associations, serving as a judge pro tempore for the Utah Supreme Court. A Utah native, Dustin earned his degrees from the University of Utah. He lives in Farmington with his wife and three children, enjoying family time, flying, and various outdoor activities.
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