August 18, 2022 | Bad Faith Insurance
Insurance companies are for-profit businesses. Even though they claim to be there for their customers, they aim to make money. Paying insurance claims cuts into the company’s profit margin.
An insurance adjuster works to limit the company’s liability for the claim. They may use various tactics to deny or undervalue claims. However, there is a line that cannot be crossed.
When an insurance company acts in bad faith when handling a valid insurance claim, the company could be guilty of bad faith insurance practices.
How Do Insurance Companies Act in Bad Faith?
Insurance companies have a duty to act in good faith and fair dealing when handling insurance claims. Unreasonably denying a claim or undervaluing damages could lead to a bad faith insurance claim.
Bad faith refers to a party being dishonest or fraudulent during a transaction. It often deals with a breach of a legal duty or obligation. Examples of bad faith insurance practices include, but are not limited to:
- Failing to acknowledge the claim or process the claim within a reasonable period
- Refusing to investigate the circumstances leading to the insurance claim
- Denying an insurance claim without providing a valid reason for the denial
- Offering an extremely low settlement offer to force the claimant to file a lawsuit
- Refusing to pay a valid insurance claim or unreasonably delaying payment
- Unreasonable demands for documentation that is unnecessary to process the insurance claim
- Misrepresenting the terms of the insurance policy or state insurance laws
- Denying reasonable requests for documents related to the claim
- Pressuring a claimant to accept an unfair settlement offer
- Canceling or changing an insurance policy after a claim is filed to avoid paying the claim
- Imposing deadlines that are not specified by the insurance policy or law
- Issuing a partial payment that includes language releasing the insurer from further liability
An insurance company must do more than make an honest mistake to rise to the level of bad faith. Also, the insurance company has the right to dispute claims, including refusing to pay a claim when it has reasonable grounds for denying the claim.
What Do I Need to Prove To Claim Bad Faith by the Insurance Company?
Elements that will be required to win a bad faith insurance case can include:
- The loss was covered by the insurance policy, which required the insurance company to take reasonable steps to process and resolve the claim
- The insurance company’s refusal to pay the claim was not based on a justifiable reason
- The insurance company failed to act in good faith and use fair business practices when handling the insurance claim
- The insurance company’s actions or breach of duty resulted in the person’s damages
- The claimant was advised not to hire a lawyer
- The insurance company does not disclose the policy benefits to the insured
Proving the above requirements can be complicated. The insurance company might not be guilty of bad faith insurance practices if it had a good faith belief that it had a legal or justifiable reason for withholding payment.
What Compensation Can I Receive for a Bad Faith Claim?
The laws permitting people to sue insurance companies for bad faith discourage companies from engaging in unethical behavior. In addition to awarding the person the full value of the insurance claim, the court may also award the person compensation for damages caused by the company’s bad faith.
Compensation for a bad faith claim can include:
- The emotional distress caused by the insurance company’s bad faith practices
- Monetary losses caused by the company’s conduct
In addition, a jury may also award punitive damages to punish the insurance company for bad faith insurance practices. The plaintiff receives the punitive damages, even though the damages are non-compensatory damages.
How Long Do I Have to File a Bad Faith Insurance Claim?
If an insurance provider does not act in good faith to settle a personal injury claim, contact a bad faith insurance attorney immediately. A lawyer might be able to help you resolve your personal injury claim with the insurance company.
When a personal injury attorney handles a claim, the insurance company may be less likely to act in bad faith since it knows an attorney understands the law and how to proceed with legal action against the company. Having a lawyer handle your case also means that you have someone working to protect your best interest during each phase of the case.
Most bad faith insurance claims fall under contract disputes. A breach of contract claim has a five-year filing deadline under Oklahoma’s statute of limitations.
However, you do not want to wait too long to contact a personal injury attorney. There are exceptions to the statute of limitations.
The exact deadline to file a claim depends on the facts and circumstances of your case. Failing to file a bad faith insurance claim before the statute of limitations expires bars you from recovering compensation for damages. Therefore, it is best to contact an attorney as soon as possible to discuss your legal options.
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