Insurance is notoriously complicated. When it comes to homeowners, the bank holding the mortgage insists on homeowner’s insurance to protect their investment. For motor vehicles, all but three states compel drivers to carry auto insurance. Fifteen states require more than simple liability insurance and also insist on personal injury protection.
It makes sense that if drivers or homeowners are required by law to buy insurance, the insurer should be there when the policyholder needs them. The vehicle (or property) owner pays a premium in exchange for the assurance that, when a claim needs to be filed, the insurance company will pay it. If your insurance company has not followed through for you, it may be an act of bad faith.
The agreement between parties is one of many duties the insurer has to the insured. A first-party claim is straightforward: Under a policy written on the property that becomes damaged, whether it is a house, car, or even a person, the insurance company must investigate the damage, decide whether the policy covers the damage and – if so – pay the policyholder. If the insurance company fails to investigate a potential claim, calculates the claim value improperly, or denies the claim outright, they are acting in bad faith.
Burg Simpson’s insurance lawyers are here to help you if your coverage has been denied or delayed unlawfully. Call us today at (720) 500-5995 or fill out our FREE case evaluation form.
Examples of Bad Faith
Since insurance is regulated primarily at the state level and is almost entirely defined by case law, what constitutes bad faith can vary wildly. Bad faith can mean much more than an unfairly denied claim. There are several ways in which an insurance company can act in bad faith, including:
- Unjustified denial of coverage
- Failure to communicate relevant information
- Failure to conduct a reasonable claim investigation
- Claim refusal without investigation
- Undue delay in denying or paying a claim
- Undue delay in confirming or denying coverage
- Failure to attempt to come to a fair and reasonable settlement when liability is clear
- Offering substantially less money to settle than the true value
- Undue delay in providing a sound explanation for claim denial
- Failure to enter any claim settlement negotiations
- Failure to respond to a time-limit demand
- Failure to disclose policy limits
Another duty insurers have to policyholders is indemnification. Simply put, this means the insurance carrier must defend any suit or judgment entered against the insured. The insurer has a duty to defend any claim that could potentially fall within the policy coverage. Additionally, courts have ruled that an insurer “who fails to accept to accept a settlement within the policy limits by not giving the insured’s interests as much consideration as its own, is liable for any resulting judgment against its insured,” even if it exceeds policy limits. Bad faith can occur when the insurer either fails to pay the judgment or improperly defends the lawsuit that leads to it.
What Can I Do If My Insurance Company Acts in Bad Faith?
Insurance companies will often run the numbers and determine if they will pay your claim or make you fight for it. If the math says it’s more expensive to pay, they will deny your claim, delay your payment, and defend any lawsuit you file, or all of the above.
Nevertheless, insurance companies are required by law to act in “good faith and fair dealing,” including investigating claims quickly and thoroughly, paying claims promptly, and communicating with policyholders openly about claims, among other things. An insurance carrier that fails to meet its obligations under the law may have not only acted in bad faith but breached its contract with the insured as well.
If you think your insurance company has acted in bad faith, you may be entitled to compensation, including punitive damages. Although damages and damage types vary wildly by state, other potential damages can include statutory penalties and interest, judgments that exceed policy limits, damages for emotional distress, and economic loss (which can include physical as well as reputational losses.)
What Can I Recover in My Personal Injury Case?
You may be able to recover the original benefits the insurance company denied or delayed, as well as a variety of other claims, including:
- Breach of contract: Strictly speaking, breach of contract is any violation of agreed-upon terms and conditions in a binding contract. In this case, an insurance contract means the insured client agrees to pay a regular premium in exchange for a promise that the insurer will cover any claim.
- A tort claim: In addition to the original breach of contract claim, a tort allows policyholders to recover up to two or more times the amount of benefits owed.
- Attorney’s fees: These can be set as a flat rate or established on a contingency basis/
- Mental and emotional distress: These are economic damages designed to compensate a plaintiff for psychological suffering as a result of an injury. It does not matter if the injury was intentional or occurred through negligence.
- Punitive damages: These may be applied as a deterrent and to punish the insurance company for its bad conduct. As a result, these damages can typically exceed policy limits.
Are Motor Vehicle Insurers Required to Act in Good Faith?
Your motor vehicle insurance company has a duty to act in good faith. The types of insurance benefits most commonly involved include:
- Uninsured Motorist (UM): This is a provision that provides drivers damages for any injury he or she receives from an uninsured, negligent driver. After a qualifying incident, the insurer pays the difference between what the uninsured driver can pay and what the injured drier would be entitled to as if the motorist had proper insurance.
- Underinsured Motorist (UIM): This is a provision that allows a victim to receive compensation after an accident with an at-fault driver whose liability limits are not adequate to cover damages and medical expenses. Your insurance will cover the gap between the expenses and what the at-fault driver’s insurance will typically pay.
- Medical Payments (MedPay): This is a provision that provides immediate and necessary medical services following a car accident that results in injury.
If you are in a car accident and a claim is brought against you by the other party, your insurance company typically has a duty to defend you and settle claims brought against you without exposing you to out-of-pocket financial losses.
What About Homeowner’s Insurance? Health Insurance?
Other insurers, including homeowner, renters, health, and disability, may be liable for their bad faith actions in handling claims. However, bad faith claims brought in health or life insurance cases can sometimes be prevented by the Employee Retirement Income Security Act (ERISA) of 1974, a federal law that establishes minimum standards for most voluntarily established pension and health plans in private businesses to provide protection for plan participants. ERISA does not require employers to establish a health plan for its employees, but it does regulate its operation if an employer decides to launch one.
Insurance matters are always complicated. There are many rules, exceptions, and variations in this area of law. Burg Simpson’s personal injury lawyers have the experience and resources to navigate this complicated landscape.
Contact the Insurance Bad Faith Lawyers at Burg Simpson
If you are frustrated with the way your insurance company is treating you after you filed a claim – whether it involves a motor vehicle accident, a house fire, or a disability – you have every right to fight for just compensation. Bad faith lawsuits can be exceedingly complex and require the expertise of insurance lawyers who have years of experience handling these types of cases.
Bad faith insurance personal injury cases can also result in large damage rewards, often because of generous punitive damage rulings. These cases can be slow, tedious endeavors because any underlying legal proceedings often have to be resolved first.
Burg Simpson can help. We have decades of experience handling these sorts of intricate cases and an unmatched reputation in the legal community. We also have the resources to overcome the deep pockets of insurance companies to secure your benefits, negotiate, and settle bad faith claims. Our trial lawyers are prepared to take your case to court if the insurance company won’t settle.
Our personal injury attorneys have helped many consumers recover compensation for the bad faith actions of their insurers. Call us today at (866) 344-7582 or fill out a FREE case evaluation form to get started with your claim.