Anytime you incur a loss, you expect your insurance company to make good on their promises to make you whole again. Depending on your experience in dealing with insurance companies, you may anticipate a smooth transaction, or you might plan to fight for what you deserve. Certain companies are notoriously easier to deal with than others.
In accordance with the law, insurance companies are obliged to maintain good faith practices with customers while providing them with insurance service. If the insurance company infringes upon this agreement, the insurance holder has every right to prosecute the company on an offense claim, coupled with a standard contravention claim on the contract. If the insurance company’s behavior was mostly flagrant, the petitioner may claim an amount which is actually larger than the original face value of the policy. It is possible to get a substantial award on a bad faith insurance lawsuit.
Bad Faith Insurance Claims
The insurance companies and their representatives are expected to carry out a fair deal while negotiating settlements or investing in personal injury claims in accordance with the law. The honest and fair dealing is generally referred to as “good faith,” which means the insurance companies must abstain from the execution of unfair deals and fraudulent practices.
As a policyholder, you have the right to file a lawsuit against the insurance company if it acts in bad faith toward you. This lawsuit, however, is quite distinct and separate from those filed as a personal injury against the party at fault for an injury-causing accident. Never claim a bad faith insurance lawsuit without the assistance of an experienced lawyer, as it necessitates special skills, training and an in-depth knowledge of the legal system.
Unnecessary delays and denials of claims are usually the basis of bad faith practices. An insurance company has a duty to operate honestly and negotiate fairly with claimants. By refusing to pay out on your policy with no explanation, or holding your payment back for one or several months, the insurance company is operating in bad faith.
Unscrupulous companies sometimes use delays and denials to force you into a lower settlement. When the adjuster makes you a low settlement offer and then refuses to negotiate, you may feel compelled to accept the initial offer. The implication is that if you do not accept this offer, you will end up with nothing.
Signs of Bad Faith Settlement Practices
When you make a claim to an insurance company, you assume they are the authority on what is covered and how much the settlement should be. You may have no experience with insurance claims, but the adjuster you are talking with handles this process every day. With little or no experience, it is difficult to know when the insurance company is acting in bad faith.
You should be aware of the fact that sometimes insurance companies negotiate in bad faith and how to spot a bad faith deal. Unfortunately, there are many measures an insurance company may attempt to deprive you of the amount you lawfully deserve.
Some of the signs of bad faith settlement practices include:
- Failure of an insurance company to confirm or deny the claim coverage after receiving the proof of loss.
- Failure of the company to respond quickly and acknowledge the statement of a covered claim.
- Failure of an insurer to pay off the covered claim because of a poor investigation of liability and damages.
- Discounts on claim coverage without an explanation.
- Affirming the claimed amount without the additional statement specifying the coverage for which the claimed amount is paid.
- The attempt of an insurer to settle a claim for considerably less than what you expected to be authorized.
- The effort to settle a claim on the basis of a policy whose content has been altered without the consent or notice of the insurer.
- Failure to promptly and fairly evaluate damages within a reasonable timeframe.
- Failure of a company to provide a rational explanation and source when refuting or proposing a compromise for the settlement of the petition.
- The insurer requires a claimant to submit a formal proof of loss form and a preliminary report of the petition that contains the same information.
- The insurer delays to settle a claim where the legal responsibility or coverage is clear under one portion of the policy to influence another portion of the same policy.
- In an effort to settle a claim, the company might hide any negotiation award that appeals to policy.
- The company is using unlawful and deceitful techniques for investigation.
- The company is making unnecessary or excessively onerous requests for documentation to support the valid claim.
- The company has put too much focus on recovering the uninsured portion of the loss.
- Failure of the company to reason the refusal of relinquishing a subrogation, thus, averting the insurer to reach a settlement with the party at fault.
- The company refuses to directly settle a petition, as and when required, and instead suggests pursuing a claim against another party before offering a settlement.
- The insurer fails to make the complete and reasonable payment of a first-party petition before asking for a settlement.
- The company is applying indiscreet, disparaging and humiliating methods of investigation to persecute the insured.
- The company is misinterpreting file documents and policy provisions, and intentionally withholding information in favor of the claimant.
- The company is making a baseless argument regarding the value of the loss of the claimant.
- The insurer is attempting to use arbitrary measures to reduce the value demonstrating the whole amount of the claim.
- The company advises the claimant not to appoint a lawyer, or threatens the claimant with non-payment.
- The insurer is treating claimants represented by attorneys as adversaries.
- The insurer cancels the policy as the consequence of making a claim when the insured is not at fault.
- Failure of an insurer to obey, fulfill or live up to the standards of the industry.
- Wrongful denial of the health benefit of an insured customer because of high payment.
- Misinterpreting the language of the policy.
- Compelling the insured to co-pay for the drugs which cost higher than the prescription to the insurer, due to a secretive deal between the insurance company and the drug manufacturers.
- Health insurers are often not acting in their customers’ best interests, instead acting with the goal of self-enrichment at the expense and disadvantage of the patient.
Good faith insurers explore the ways to assent and pay the claims of the policyholder properly, and in a timely manner. Bad faith insurers will find a deceitful way to delay the payment, diminish the amount of the petition and disapprove or refute the payment of claims.
Bad Faith Insurance Lawsuits
By law, in any state, a company is obliged to serve you in good faith when you file an insurance petition with them. In simpler terms, an insurance company must not attempt to seek ways to get out of paying the claim or fulfilling its obligation for investigation of the claim. Escaping from the duty would constitute bad faith. Bad faith claim lawsuits may stem from numerous actions or inactions demonstrated by the insurance company, from refusing a coverage amount to unlawfully negotiating a settlement.
You must try to explore your options when your insurance company rejects your petition for policy benefits. As the initial step, ask the insurance company owner or supervisor to review and investigate the petition. As the next step, you can contact your state’s insurance regulatory agency. If neither of the first two steps result in the desired outcome, you can opt for an attorney.
Record the details of each conversation with the person who reviewed the petition. Your notes on each conversation should include the name of the person, the date and the time when the conversation took place. Make a note of everything you discussed, and how the conversation ended. If someone asked you to provide additional information or documentation, or mentioned a verbal settlement offer, be sure to keep track of that.
File duplicate copies of all the letters, emails and faxes exchanged with the company with regard to the claim in a safe place. If your appeal to the supervisor remains unsuccessful, and you still think your petition is fair and just, you can discuss the situation with an attorney.
Your attorney will review all documentation and correspondence regarding the bad faith insurance claims of your policy. As the initial step, your attorney will write a letter to the key personnel at the insurance company explaining your claim. This initial letter sets forth the applicable specifications of your policy, what your situation is and why you are eligible for a certain settlement amount. This letter might compel the insurers to scrutinize the claim and make the requested payment.
Your attorney will have to decide whether the complaint will be drafted in a federal court or a state court, and select a forum which will have the particular insurance company under its jurisdiction. The petition is likely to be comprised of:
- Petitions for the convention of the policy, negligence, bad faith and fraud
- Unfair practices of settlement in the jurisdiction
- A petition for the violation of the decree
- A petition for damages due to the bad faith of the defendant
- All payments under the policy
As a petitioner, you can still go further with the petition for bad faith, even if the other claims are being paid later.
The attorney can request the insurer produce certain relevant documents — the most important of which is the claim file, which will include the claim adjuster’s notes about your petition. The attorney and can also force the insurance company to answer a few written questions, or interrogatories. The supervisor, claim adjuster and the other representatives of the insurance company can also be deposed by the attorney.
The claim file might be evidence to prove that the company was neglecting your petition, and handling it in a fraudulent way. Moreover, the attorney can also request the insurer’s claim manual, which triggers the processing of the claim. A claim manual is evidence that can establish the insurer’s bad faith and that can prove the insurance company was not following processes lawfully.
Commencing a lawsuit can result in the settlement of the petition even before the trial. Both parties will typically continue negotiating throughout the procedure of the bad faith insurance lawsuit. On the contrary, if the case proceeds to trial, evidence and arguments will be put forward and witnesses will be questioned by the court of law and finally, the judge or jury will give the verdict on the issue.
Therefore, if you believe your insurance company is unlawfully denying your claim, you can choose to consult your attorney. An attorney can help you bring a bad faith claim against the insurance company that may result in the settlement payment you are entitled to. It will also trigger an investigation by the state insurance board that could result in changes to the insurance company’s practices.
For a complete guide to the bad faith claim process, including what to do when your insurance company does not cooperate with your claim to your level of satisfaction, contact KBG for a free consultation.
The personal injury attorneys at KBG Injury Law are all experienced litigators. Almost all of them represented insurance companies prior to becoming advocates for injured people, which provides them with a unique perspective and insight into how these companies operate. They also offer extensive courtroom experience if going to trial is the best legal alternative for the client.