Settling insurance claims is something that is almost always done by insurance companies. The policy holder doesn’t come close to their experience in negotiation and an abundance of resources. This is why when an insurance company undercuts you, it gets called a bad faith insurance claim when you fight back. If your insurance provider doesn’t process and investigate the matters the way they should, you have the legal right to file a lawsuit to sue them for their intentional or unintentional negligence. Not every bad faith claim is dealt with the same way, as different states have different laws regarding their procession. There are two basic foundations of any bad faith claim; it’s either processed under the common law’s rules and regulations or the violation or breaking of a statue set by the state. A bad faith includes many legalities and it’s important to understand them if you’re serious about it.
What to Do?
When your insurance company denies or provides an unreasonable amount of settlement and you’re sure the claim is valid, you should start suspecting that the company is acting in bad faith. Initially, you can begin by asking a higher-ranked agent to review your claim and you can also get in touch with the insurance company’s regulatory agency. If both steps fail, you may need to contact an insurance attorney to help guide you through the bad faith claim. Seasoned insurance attorneys from Kerley Schaffer LLP know that insurance companies acting in bad faith can do everything in their power to delay settlements and force their policyholders into a long battle in the courts to make it harder to reject the company’s offer. An attorney can see through many plots and obstacles insurance companies can throw at you and help you deal with them in the best manner.
Common Law Bad Faith Claim
Under the common law’s umbrella, some states find that bad faith means unreasonable, or without proper cause; some view it as a breach of contract. The common element between states is that the insurance company of the policyholder is held responsible for the fair processing of the holder’s claim. For the policyholder to create a bad faith claim, they must shed light on two things:
Benefits Withheld
This is considered one of the crucial elements of a bad faith claim as the policyholder proves that their original claim, which was denied, was a valid one. You should get your hands on the documentation proving the insurer denied the claim before you proceed. Some states require a final demand request to the insurer before you get to file a lawsuit.
Denial Unreasonableness
The denial of the claim by the insurance company is required by law to be reasonable and within logic; failing to provide a reasonable reason for denying is evaluated in an objective matter that includes the context and facts. Negligence, sometimes, isn’t enough to prove liability.
Important Elements
There are some actions done by insurance claims that are commonly found by the courts as bad conducts. While they may not be enough to prove the unreasonableness every time, they are to be used to your advantage:
- Fact or policy misrepresentation
- Being too slow in identifying a claim
- Failure to uphold certain standards and procedures during the claim investigation
- Taking too long to approve or deny claims when proof has been provided
- No or unreasonable reasons provided for a claim denial
This isn’t a conclusive list of what courts believe to be as actions in bad conduct. However, they should be enough to help you build a strong case against your insurance company.
Statutory Bad Faith Claims
It’s not uncommon for bad faith lawsuits to include both statutory and common law allegations. A statutory bad faith claim is more dependent on the state’s legislature. There are some common dishonest or unfaithful practices done by insurance companies, but the state has some specifically devised laws to protect its citizens and policyholders from. In some states, a claim can be brought under the state’s Unfair Insurer Practices Act. Statutory bad faith lawsuit’s elements include
- Litigation of the insured to recover money due to an insurance policy
- Unreasonable or no explanation of the denial of a claim, similar to common law’s element
- Unfair settlement or taking too long when the liability can be easily proven
- Not conducting a thorough and prompt investigation before claim denial
- Subpar and improper standards of investigation
Bad faith insurance claims are more common than you’d think, as some insurance companies sometimes prefer to minimize their payouts and settlements by hurling legal obstacles at you to make you refrain from getting what you’re owed. As long as you’re relentless and have a valid claim, you’ll be able to win.
