Insurer Bad Faith in Kentucky
Some insurance companies seem to view their customers—the “insureds” who have purchased policies from them—more as enemies than people to whom they owe a duty. Large insurance companies may go s far as to reward the people who work in the claims handling area—claim managers, adjuster, etc.—for minimizing the amount of money they pay out on claims.
But the insurer’s conduct doesn’t have to be anywhere near that blatant to harm the insureds that have paid premium after premium for insurance protection that the insurer may ultimately deny them in order to save money.
Insureds Can Sue for Bad Faith
Kentucky provides insureds who have been harmed by this kind of “bad faith” the right to sue the insurer for bad faith. That right started out with a court decision (“common law”) and has been augmented with specific statutes that spell out what an insurer cannot do.
Unlike many other states, Kentucky provides a fairly narrow right to sue, requiring that suit can only be brought if the insurer:
• Is obligated to pay the claim under the terms of the polic...