Most of us like to think and believe that if an accident occurs to us, our insurance company will rightfully settle our claims and help us in this difficult period. Unfortunately that is not the case always. Bad faith insurance claims are a reality. Tackling them properly to receive your justified amount is a paramount legal and financial process.
To fight bad faith insurance claims, we need to first understand the circumstances that bad faith in insurance can arise, the ways in which insurance companies deny policy owners’ claims, the elements you need to prove your case, and the damages available.
Most of us pay our insurance on time. But beyond that we don’t know much about large insurance recovery and implementation for the very simple reason that majority of us don’t face such circumstances in life.
What is Bad Faith?
An insurer may be acting in bad faith if the insurer delays, discounts or denies payment without any reasonable basis for doing the same. Fraudulent activities occur on the premise that the insurer has failed to investigate claims properly, and is deliberately denying or intentionally underpaying claims.
Factors You Will Need to Prove to Establish Bad Faith
Failure of insurer to deny or affirm in a given period of time to the received notification of a covered claim.
Insurer attempts to settle claim for much less than the reasonable amount, and makes deliberate attempts to diminish a claim requiring an insured to initiate litigation.
Attempt to settle claims on basis of an application or policy that was altered without notice or consent of the insured.
Making payments for claims without accompanying statement indicating what are the areas of coverage.
Insurer demanding claimant to submit both preliminary claim report and formal proof of loss. Both the documents contain the same information.
Insurer attempts to thwart settling of one portion of the claims in order to influence the settlement of the other portion as well.
Not following standard procedures called for in an insurer’s claims manual.
Reducing or altering policy coverage without informing the insured.
Treating the insured or claimant as adversaries.
Advising the claimant to not get into litigation or hire an attorney.
Cancellation of a policy after making claim in an accident where insurer was not at fault and in conflict with industry standards.
Not complying to industry standards.
Using misappropriated or inaccurate information to diminish or delay payment.
Using physical coercion and victimizing tactics and actions to intimidate and scare the claimant so that he does not follow up the claim.
Misrepresentation of policy language.
Denying covered health benefit insurance because of heavy costs, and suggesting a less costly and ineffective procedure.
Insurer refusing to settle a third party claim against an insured within the limits of the insured’s policy and thereby exposing the insured to additional liability.
Health insurers working for their own enrichment at the health expense and disadvantage of the patient.
Attribute the blame of shoddy investigation on the insured.
Responding to Bad Faith
In instances of bad faith, the negotiation process can take several weeks. The adjuster will deliberately try to use tactics that delay the negotiation. You can use your own tactics to counter him, but within the period of statute of limitations.
Act Before the Statute of Limitations Expire
Once the statute of limitations expire, you cannot file a lawsuit. In bad faith insurance it is recommended that you consult an expert attorney at the earliest and commence the litigation process to receive your rightful claims.
Get everything in Black and White
The moment you start experiencing that the adjuster is deliberately trying to diminish or deny your claim, put your safety radar on. Demand the reasons of the insurer’s actions in writing.
If your request is not complied with, send a certified letter which includes a return receipt. In your letter clearly mention the practices carried out in bad faith. Also, do include the fact that your request to receive everything in black and white was not met.
The fact that the bad faith act has been recorded in black and white may compel the adjuster or insurer to stop the bad faith practice. On the other hand, even if the insurer does not do so, you have gathered some pretty strong evidence that gives you the edge in the settlement.
Contact the State Insurance Authority
If the insurer continues with his tactics in spite of the written notification, contact the state insurance authority. Every state insurance board has a set of rules and regulations for dealing with those acting in bad faith.
Once your complaint is filed, the investigation starts. When the board finds evidence of bad faith, the state sends a notice to the responsible insurance company, and asks them to address the problem.
The loophole however is that, the state insurance board cannot order insurance companies to meet all the claims. The company can be fined, but nothing beyond that.
Hire an Attorney
More often than not, you will need to hire an attorney for a bad faith insurance case. When injuries occur and especially if they are severe, insurers do create problems and many times cases of bad faith arise. When breach of contract occurs, these insurance companies are also liable to give additional personal injury claims for causing injury to the claimants through their bad faith actions.
Having an attorney is also essential in navigating the case better as your attorney is more tuned to the defenses that the insurance company can come up with, knows how to break them and what exactly the policy-holder needs to prove in order to receive his rightful compensation.
Damages You Need to Recover
When an insurance company breaches its duty of good faith and fair dealing, and, you have to file a lawsuit to recover your benefits, the legal costs including attorney fees must be borne by the insurance company.
Insurance companies are awarded punitive damages for engaging in oppressive, unlawful, and malicious conduct. This clause can be used in negotiations wherever applicable.
As the distressed policy owner you are also eligible to recover damages for the emotional and mental turbulence the insurance company made you go through.
Written accusations of bad faith insurance actions receive prompt remedies from the insurer. If it’s proven that the insurer acted in bad faith, they have to pay damages to the insured much above the injury compensation amount.
As the rules vary in bad faith actions from state to state, it is not easy to win these cases. But with an expert personal injury attorney, the possibility of a litigation over bad faith itself can nudge a high settlement from the erring insurance company.
Kathleen Standley is a freelance content writer & blogger and a marketing geek. She is an avid reader and has been writing and blogging since the last 5 years. Presently, she works with Mike Bottaro – a Rhode Island Personal Injury Lawyer and Founder of The Bottaro Law Firm, LLC based in Cranston, RI. In her spare time, she loves to hang out with friends and enjoys meeting new people from her industry.