You’ve been in an accident and now you believe that the insurance company is acting in bad faith. What can you do? Many people believe that they are helpless, that they are powerless to fight an insurance company, but that simply is not true. Insurance companies are held to the law just like any other company. They have laws that govern them and if they act outside of those laws, there are penalties they must pay. Not only can a person fight an insurance company, they can win. However, in order to get to that point, you first need to understand how bad faith insurance claims work – and why you really should get an attorney.
Bad Faith Insurance Defined
When you file a claim with an insurance company, the law says that they have a duty to you to act in good faith. This means that they have an obligation to pay you or investigate the claim. When an insurance company looks for ways to get out of fulfilling this obligation, it is called bad faith.
Reasons You Can Sue Insurance Companies for Bad Faith
Bad faith lawsuits and claims may stem from a single action or several that the insurance company takes in an effort to deny your claim or get out of paying you what is appropriate. Some of the more common reasons that people sue insurance companies for bad faith include:
- Denial of coverage on unjustifiable grounds.
- Refuses to deny coverage or confirm it within a reasonable time.
- Failure or refusal to engage in any negotiations for the purpose of settling the claim.
- Does not communicate vital or important information to the claimant.
- Refuses to negotiate a reasonable and fair settlement although liability is apparent.
- Refuses to respond to a time limit demand.
- Does not conduct a reasonable or valid claim investigation.
- Lowballs the settlement or offers a settlement that is significantly less than the claim’s true value.
- Refuses to disclose to describe limits on the policy.
- Refuses the claim without conducting an investigation.
- Does not provide a reasonable explanation for a claim denial in a timely manner.
- Does not pay the claim or deny it within a reasonable time.
An Undesirable Outcome is not Necessarily Bad Faith
Not all cases where the settlement does not go your way are bad faith. For instance, if an adjuster felt that your claim was worth a certain amount – and did his or her due diligence to arrive at that figure – yet you believe it should be more, that does not necessarily constitute bad faith. Differing opinions are just that.
You have to look at the effort that was put into determining that amount. Did the adjuster conduct a thorough investigation? Has the adjuster been timely with sending you information on your claim? Does everything line up with the policy?
If so, then it likely isn’t bad faith. However, if he or she refused to tell you specifically why you were offered a low settlement, or was not prompt in his communication with you regarding the decision, you might have a bad faith case.
Determining if you’ve been the victim of bad faith insurance is not always straightforward. There are many possibilities which is why most people are advised to get an attorney to handle their case. An attorney knows how to spot bad faith insurance and they know how to take action.
Bad Faith Insurance Could Result in Damages
If an insurance company is sued and found to have operated in bad faith, they could be liable for damages that extend far beyond the limits of the policy. The plaintiff in a bad faith insurance case can seek several types of damages, including:
- Emotional distress
- Punitive damages
- Statutory penalties
- Attorney’s fees
- Statutory interest
- Economic loss (this can include loss of property, loss of business, loss of credit reputation, etc.)
Punitive damages are fairly commonly awarded to victims of bad faith insurance. This type of damage is not determined by the losses that the claimant incurred, rather the wealth or assets of the insurance company. This is what can drive the award up considerably.
If you feel that you have been the victim of bad faith insurance, don’t try to handle it on your own. Get an attorney who will fight for you and help you get the full compensation that you are due. At The Law Offices of Ivan M. Diamond we will work for you. You do have the power to come against an insurance company that isn’t being fair – and we are in your corner.