Bad faith claims allow persons and entities to claim compensation for damages suffered, or potentially suffered, when an insurance company limits or denies coverage without proper notification or justification. This can occur when an insurance company undervalues a claim; when they delay payment of benefits; or when they unjustifiably deny or avoid a claim. However, insurance bad faith claims require significantly outrageous conduct, not merely conduct based on a reasonable disagreement or honest mistake.
Claims against insurers in North Carolina can be enforced through breach of contract actions and through North Carolina’s Bad Faith statute, which is enforced through the North Carolina Unfair and Deceptive Trade Practices Act (“UDTPA”). This is significant, because UDTPA potentially allows recovery of attorney fees.
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