Buying an insurance policy isn’t just about the premium you pay for coverage. It’s also about trusting that your insurer will have your back when you need them most. Unfortunately, not all insurance companies uphold this trust. Some may act in bad faith, which can leave policyholders feeling frustrated and betrayed.
When you submit a valid insurance claim and your insurer fails to fulfill its obligations, you may feel anxious and irritated. Such cases can be even more confusing when you’re told your claim is being denied. If this happens to you, it’s important to know that you do have options and can take legal action against your insurance company.
So, can you sue an insurance company for bad faith? The answer is yes. If your insurer has acted in bad faith, you can sue them to recover compensation.
Read on to learn more about what bad faith insurance claims are, how to spot the signs of bad faith, and what you can do if your insurer has acted in bad faith.
How Insurance Companies Operate
Most insurance companies simply do not want to have to pay out on claims. It’s important to remember that insurance companies are for-profit businesses. Their goal is to make money, not necessarily to help you.
This profit motive can sometimes lead insurers to act in bad faith. When an insurer denies a valid claim or offers a low settlement, they may be hoping that the policyholder will give up and go away.
In simple words, when an insurance company pays you your legally-deserved money, they are losing profit, which is not what they want.
The Duty of Good Faith of an Insurance Contract
When you purchase an insurance policy, you are entering into a contract with your insurer. This contract requires both you and the insurer to act in good faith.
This means that you must pay your premiums on time and follow the rules of the policy. In turn, the insurer must fulfill its obligations to you. This includes investigating and paying valid claims in a timely manner.
If either party breaches the duty of good faith, it can be considered insurance bad faith.
What Is a Bad Faith Insurance Claim?
When you file an insurance claim, you’re trusting that your insurance company will handle the situation in a fair and timely manner. However, sometimes insurers can act in bad faith, which can leave policyholders feeling frustrated and betrayed.
So, what is a bad faith insurance claim? In short, it’s when an insurer breaches its contract with a policyholder and fails to fulfill its obligations. This can include denying a claim without a valid reason, delaying payment, or engaging in other unfair tactics.
Bad faith isn’t just a difference of opinion. It’s a deliberate attempt to deprive policyholders of the benefits they’re entitled to. If you suspect that your insurance company has acted in bad faith, it’s important to speak to a lawyer as soon as possible.
Bad faith claims can be especially confusing and frustrating when you’re already dealing with the stress of having your property damaged or losing your livelihood. That’s why it’s important to know your rights and understand how to spot the signs of bad faith.
Examples Where An Insurance Company Acts Egregiously
Insurance companies act in bad faith in several ways, including but not limited to the following:
- Failing To Fully Investigate Your Claim: Your insurance company has a duty to investigate your claim. This includes reviewing all the evidence and talking to witnesses. If your insurance company fails to do this, they may be acting in bad faith.
- Denying Your Claim Without A Valid Reason: If your claim is valid and your insurer denies it, they may be acting in bad faith. In some cases, insurers will deny claims without any justification.
- Delaying Payment: If your insurer is taking an unusually long time to process your claim, they may be acting in bad faith. Insurers will also sometimes drag their feet in the hopes that policyholders will give up and drop their claim.
- Lowballing Your Settlement: After investigating your claim, your insurer may offer you a low settlement. If they do this without any justification, they may be acting in bad faith. You are entitled to a fair settlement, and your insurer should not try to lowball you.
- Refusing To Pay Your Claim: In some cases, insurers will outright refuse to pay valid claims. This is a clear case of bad faith and can leave policyholders in a difficult financial position.
Steps To Take Before Filing A Lawsuit
If you believe your insurance company has acted in bad faith, it’s important to take the following steps:
1. Review Your Policy
The first step is to review your insurance policy. This will give you a better understanding of your coverage and what benefits you’re entitled to. By getting a fully dated copy of your policy from the insurance company, you can also make sure that you’re not being misled about your coverage.
2. Gather Evidence
If you’re planning on filing an insurance bad faith claim, it’s important to gather as much evidence as possible. This can include things like photos, medical records, witness statements, and anything else that can support your claim. Make sure to secure the evidence from your original claim as well as any new evidence that shows the insurance company’s bad faith tactics.
3. Send a Written Demand Letter
After you’ve gathered your evidence, the next step is to send a written demand letter to the insurance company. This letter should detail your claim and the evidence you have to support it. It should also give the insurance company a set amount of time to respond. If they don’t respond or deny your claim, you can then begin the process of filing a lawsuit. Insurance companies usually have 15-60 days to respond to a demand letter.
4. File A Lawsuit
If your insurance company denies your claim or fails to respond to your demand letter, you can then file a bad faith insurance lawsuit. This can be a complex and time-consuming process, so it’s important to have an experienced attorney on your side.
Benefits of Hiring a Bad Faith Claim Lawyer
When you’re dealing with the stress of an insurance company bad faith claim, it can be helpful to have an experienced lawyer on your side. A bad faith insurance lawyer can help you gather evidence, file a lawsuit, and negotiate a reasonable settlement offer. They can also help you understand your rights and what to expect during the legal process.
Here are a few benefits of hiring a bad faith insurance lawyer:
1. Free Case Evaluation
When you contact a bad faith insurance lawyer, they will offer you a free case evaluation. This is an opportunity for you to tell them about your claim and get their professional opinion. During the evaluation, the lawyer will also be able to tell you if you have a strong case.
2. No Upfront Costs
Another benefit of hiring a bad faith insurance lawyer is that there are no upfront costs. You can usually hire a lawyer on a contingency basis, which means they don’t get paid unless they win your case. This can make it easier to afford legal help when you’re already dealing with the financial burden of a denied insurance claim.
3. Experienced and Knowledgeable
When you hire a bad faith insurance lawyer, you can be confident that you’re getting experienced and knowledgeable representation. A good lawyer will have experience dealing with insurance companies and knows how to build a strong case. They can also answer any questions you have about the legal process and help you understand your rights.
4. Better Settlement Amount
In many cases, hiring a bad faith insurance lawyer can lead to a higher settlement amount. Insurance companies are more likely to take your case seriously when you have legal representation. They may also be more likely to offer a fair settlement if they know you’re prepared to take them to court.
5. Peace of Mind
Perhaps the biggest benefit of hiring a bad faith insurance lawyer is the peace of mind they can provide. When you’re dealing with the stress of a bad faith insurance claim, it can be helpful to have someone in your corner. A good lawyer will fight for your rights and make sure you get the compensation you deserve.
Hiring a bad faith insurance lawyer can give you the best chance of winning your case and getting the settlement you deserve. If you’ve been denied an insurance claim, don’t hesitate to contact an experienced attorney for help.
What Damages Can You Recover in a Bad Faith Insurance Claim?
If you’re successful in your bad faith insurance claim, you may be able to recover a variety of damages. These can include:
1. Past Due Benefits
If your bad faith insurance claim is successful, you may be able to recover past-due benefits. This means you would receive the money you would have gotten if your insurance company had paid your claim in a timely manner.
2. Future Lost Benefits
In some cases, you may also be able to recover future lost benefits. This can occur if your insurance company denies a claim for benefits you’re entitled to in the future. For example, if your insurance company denies your claim for long-term disability benefits, you may be able to recover the value of those benefits in a bad faith insurance lawsuit.
3. Mental Anguish Damages
In some cases, you may also be able to recover mental anguish damages. These are damages that compensate you for the emotional distress caused by the bad faith insurance claim. To win these damages, you will need to show that the insurance company’s actions caused you severe emotional distress.
So, can you sue an insurance company for bad faith? The answer is yes. If you’ve been the victim of bad faith insurance practices, you may be able to file a lawsuit against your insurance company. You can also hire a bad faith insurance lawyer from Wells|Trumbull to help you with your case. Contact us today!