Bad faith insurance cases are common. Consumers purchase insurance policies to provide support in times of need. The insurance company’s duty is to act honestly and negotiate fairly with their policyholders. What happens when an insurance company doesn’t live up to its obligations? A bad faith insurance case. It refers to when insurers attempt to go back on their obligations to clients, either by refusing to pay a policyholder’s legitimate claim or to investigate a customer’s claim within a reasonable period of time.
Insurance companies can begin acting in bad faith even from the start of a customer relationship. They may do this by misrepresenting an insurance contract’s language or by failing to disclose policy limitations and exclusions. They persuade clients to sign on as policyholders under false pretenses so they can later avoid paying claims. It’s a form of deception.
Insurers may also act in bad faith after a policy purchase in a variety of ways. These include making unreasonable demands on the policyholder to prove a loss, failing to implement reasonable standards for the investigation, or failing to prove a reasonable explanation for denying the claim. Many insurance companies are betting that you’ll give up and won’t pursue further action if they make it difficult for you to settle your case.
What to Do if You’ve Experienced a Bad Faith Insurer
If you think you’ve been subject to bad faith actions from your insurer, there are several steps you should follow to seek a fair settlement—and establish your case if you pursue further action. First, you need to be able to prove your claim’s validity and that it falls within the terms of your policy. Be sure you’ve obtained a copy of your insurance policy. You should also collect all documentation of injuries/damages or other proof of liability. These items may include photos, reports, receipts, and estimates. You’ll need these items to show the policy should reasonably cover your claim.
Then, make a formal request to the insurance company to review and investigate your case. If your claim is denied, take your request up the ladder by asking a supervisor to review your claim and the resulting denial. If this fails or you don’t receive a response, you can follow up with a complaint to your state’s insurance regulatory agency. It’s possible this will inspire your insurer to reconsider your case.
With each step, be sure to record the details of your conversation, including the date and time the conversation took place, the name of the person with whom you spoke, and what you discussed. Keep duplicate copies of all your correspondence with the insurance company, including letters and emails, in a safe place. If you’re asked to provide additional information, keep track of those requests and how/when you completed them.
If you decide to hire counsel, your attorney will need to review all this documentation to see if it establishes a case against your insurance company. Moving forward, your attorney may send a letter to your insurer using it to review and settle your case fairly. If the letter isn’t enough to spur the insurer into action, your attorney may move forward with a lawsuit.
Elements of a Bad Faith Insurance Claim
If your insurance company fails to act upon your policy faithfully, you may have the right to file a lawsuit. There are two common elements necessary to prove a bad faith insurance claim:
- Benefits due under the policy were withheld. To prove a case using this tactic, you (or your lawyers) must demonstrate you had a valid claim within the terms of your policy, yet your insurer denied your claim.
- The reason for withholding benefits was unreasonable. The judge will objectively evaluate whether the insurance company acted rationally based on your particular situation. In most cases, negligence is not enough to prove the insurer was acting in bad faith. Your case must establish the insurer purposefully acted to deny your rightful coverage.
An attorney can guide you through this process.
How Sanchez and Piñon Can Help
If you feel you’ve been subject to a bad faith insurance company and are seeking a lawyer, contact Sanchez and Piñon, Rio Rancho’s auto accident and injury attorneys, for a free consultation. While other attorneys talk, we listen and provide a personal level of representation. We can discuss how to fight for the compensation you deserve.