When it comes to insurance policies, insurers should always act in good faith and honor their contractual obligations. However, there are instances where insurers engage in bad faith practices. Proving and pursuing a bad faith insurance claim is crucial for you to get the compensation you deserve under your insurance policy. Continue reading to learn how to prove and pursue a bad faith insurance claim.
Understanding Bad Faith Insurance Claims
Bad faith in the context of insurance refers to an insurer's failure to honor its contractual obligations to its policyholders. These occur when an insurance company fails to act in your best interest when you file a valid claim. Examples include:
Breach of Contractual Obligations
Insurers have a legal obligation to uphold the terms of your policy. Any failure to fulfill the promises made in the insurance policy, such as providing coverage for specified risks or paying claims in a timely manner, may constitute bad faith.
Delaying Claims Processing
Insurance companies may deliberately prolong the claims process to pressure you into accepting a low settlement or to avoid paying the claim altogether. This can cause financial strain when you need something to cover medical expenses, property damage, or other losses.
Failure to Investigate Claims Properly
Insurance companies have a duty to conduct prompt and thorough investigations; failure to do so can result in the wrongful denial of valid claims or the underpayment of benefits owed to policyholders.
Misrepresentation or Fraud
In some cases, insurers may engage in outright deception or fraud by misrepresenting the terms of the policy, falsifying documents, or using other deceptive tactics to deny or minimize claims.
Offering Inadequate Settlements
In some cases, insurers may offer settlements that are substantially lower than the value of the claim and try to take advantage of policyholders who may not fully understand their rights or the true extent of their losses.
Unreasonable Denial of Claims
One of the most egregious forms of bad faith is the unjustified denial of valid claims. Insurers may deny claims without conducting a thorough investigation, misinterpreting policy language, or relying on excuses to avoid paying out benefits owed to the policyholder.
Step-by-Step Guide to Proving and Pursuing a Bad Faith Insurance Claim
Step 1: Recognize signs of bad faith
Bad faith can manifest as unreasonable delays in claims processing, outright denial of valid claims without proper investigation, offering substantially less than the claim's value, and more.
Step 2: Gather evidence
Document all communications you have with the insurance company, including emails, letters, and phone calls. Record all damages and losses resulting from the incident covered by the insurance policy, including medical bills, repair estimates, and receipts.
Step 3: Consult with legal experts
Seek legal representation from an attorney who specializes in bad faith insurance claims and has a proven track record. Discuss the specifics of your case and determine the best course of action for proving and pursuing the bad faith claim.
Step 4: File a complaint
Follow the statutory requirements for filing complaints against insurers and determine whether to file a complaint with a regulatory agency, such as the state insurance department.
Step 5: Pursue litigation if necessary
Prepare for trial by gathering evidence, interviewing witnesses, and developing legal arguments to support your case. Have your lawyer present compelling evidence and arguments to prove that the insurer acted in bad faith.
Step 6: Seek appropriate remedies
Seek compensation for the damages and losses incurred as a result of the insurer's bad faith actions, including medical expenses, property damage, and emotional distress.
Proving and pursuing a bad faith insurance claim involves recognizing signs of bad faith, gathering evidence, consulting with legal experts, filing a complaint, pursuing litigation if necessary, and seeking appropriate remedies.
By proactively holding insurers accountable for bad faith practices, policyholders like you can seek justice and fair treatment. If you believe you've been a victim of bad faith insurance practices, contact our civil litigation attorneys at East Idaho Law.