What Constitutes Bad Faith If An Insurer Denies My Claim?
Bad faith, in a nutshell, is when an insurance carrier denies a claim illegally. It can occur in one of two ways: either an insurer improperly refuses to defend a lawsuit, or they improperly refuse to pay the settlement of a covered lawsuit. Bad faith is a fluid concept, defined primarily by court decisions in case law.
Examples of bad faith include excessive time in claim handling, insufficient investigation, refusal to defend a lawsuit, threats against a policyholder, refusing to make a reasonable settlement offer, or making unreasonable interpretations of an existing insurance policy.
A recent story out of Louisiana perfectly illustrates how a bad faith claim can arise.
What is an Example of Bad Faith Insurance Dealings?
A homeowner is suing his insurance provider for failing to provide a proper evaluation of damage after a hurricane struck. He bought a homeowners property insurance policy from State Farm and Casualty Company that provided coverage in the amount of $136,700 for the home. The plaintiff says that the policy was in effect when Hurricane Isaac struck his home in August of 2012, damaging his roof and the interior of the property.
An adjuster employed by State Farm estimated the damages at $4,500, when the damages were actually much higher. The plaintiff also insists he was informed that all damages would be paid within 30 days—as provided by law—but this has not yet taken place.
The insurance giant is being sued for an unspecified amount in damages, covering a number of transgressions, including breach of contract, bad faith claims handling, negligent claims handling, non-prompt payment, and negligent misrepresentation.
How Can I Fight Back Against Bad Faith Insurance?
When dealing with insurance companies on your own, just using the term “bad faith” makes it obvious that you know what you are talking about. If you need to take it a step further, you could also send your insurance company a letter stating in writing that you believe your claims adjuster is acting in bad faith.
More than anything, though, it is important to understand that winning a bad faith case in court is extremely difficult, and best handled by an attorney who understands the intricacies of insurance law.
Your dispute might be settled through mediation or you may need to go through litigation. Either way, it is essential to have the right legal counsel on your side to make sure that your priorities and interests are respected. Insurance arguments are a complex part of business law, and your organization will benefit from a Hoffman Estates attorney who understands how to work with an insurance company. Call us today.