How Do I Prove a Bad Faith Insurance Claim?
Insurance, in many cases, is required by law. Common types of insurance include auto, disability, health, homeowners’, life, and renters’ policies. When you purchase insurance, you do so for the reassurance and security it brings, knowing that in the event of an accident, your losses, whether due to personal injury or property damage, are covered. Having insurance not only protects you but also provides compensation for the other party involved if you are at fault in an accident.
There are times, however, when an insurer behaves unethically. There are steps you can take if you’re grappling with how to prove bad faith in an insurance claim, including contacting a bad faith insurance attorney.
Good Faith Versus Bad Faith
As an insurance policyholder, you pay monthly premiums as a condition of the contract you sign. In return, as a measure of good faith, the expectation is that the insurer will meet its obligations if an unfortunate event occurs.
Sometimes, however, an insurer may unfairly deny your claim through an unethical, dishonest, or deceptive practice known as a bad faith action. If this occurs, you have the right to file a bad faith claim against the insurance company. The downside to this scenario is that you have to prove it. While this process can be arduous, it’s not impossible.
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Bad Faith Actions and Insurance Claims
Wrongfully denying insurance claims is a fraudulent practice that constitutes an ethical violation on the part of the insurer. In addition to an unreasonable claim denial, examples of these bad faith actions include:
- Executing a biased investigation
- Failing to communicate promptly
- Improperly investigating the incident
- Misrepresenting policy terms
- Not providing proof when denying a claim
- Offering a low settlement based on a restrictive policy interpretation
- Refusing to pay a fair amount based on the facts of a case
You have rights if you believe your insurance company is not appropriately handling your claim and acting in bad faith. If your claim has been denied, reaching out to a lawyer may be beneficial to reversing this decision.
Remember that your insurance adjuster is the primary individual who handles your case. These adjusters know that once an attorney becomes involved, they will advocate for good faith standards by holding the insurer accountable. This pressure often leads the adjuster to take favorable actions on your behalf.
Acting in Good Faith: An Insurer’s Obligation
Through the terms of your contract, an insurance company makes an agreement with you. As the insured, you agree to pay the monthly premium to keep your policy active. In addition to timely payments, you’re expected to maintain an honest relationship. This consists of providing the insurer with any new details connected to your policy and being forthright with all information connected to the claims you file.
Likewise, your insurer is obligated to act in good faith by properly handling your claim and taking care of your needs as detailed in the policy, including honoring its terms in full and accurately processing claims.
When your insurer violates this agreement in an act of bad faith, you are in a position to pursue damages.
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Taking a Stand by Seeking Compensation
Depending on your state, different laws determine the rules involved when filing a bad faith claim. You will need to prove that the insurer exhibited fraudulent or intentionally unethical behavior, which is where an attorney can assist you. While this process can be time consuming when you win a bad faith case, you can recover additional damages, such as the following:
- Initial recoverable damages: These include all medical treatment costs, healthcare for sustained injuries, retroactive lost income, future lost income, and property damages.
- Extracontractual damages: The money you lost and expenses you gained because of the insurer’s bad faith actions may entitle you to extracontractual damages, including any lawyer fees, emotional distress, health costs, and additional out-of-pocket expenses incurred due to their infraction.
- Punitive damages: Although uncommon, these recoverable damages are a direct response to the insurer’s bad faith actions, penalizing the insurer as a way to protect future clients.
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How To Prove a Bad Faith Insurance Claim
You will need to take precise steps if you believe your insurer has used bad faith approaches to unfairly deny your claim. When filing a bad faith insurance claim, you must keep documented evidence of denial and prove a breach of contract on the part of your insurance company. Below are several action steps you can take.
- Examine your insurance contract to ensure the insurer violated the terms of the agreement.
- Document evidence by keeping detailed communication of all records between you and the insurer.
- Seek assistance from the insurance company supervisor by requesting a detailed case review.
- Send a demand letter with all your claim details using a return receipt. The company will reply within 15 to 60 days.
- Contact your state’s Department of Insurance and file an insurance regulatory complaint.
How an Attorney Can Help
An assured way to protect yourself as you review the details of your case and work through how to prove a bad faith insurance claim is to consult with an attorney. A seasoned attorney will have the knowledge base to help you navigate the complexities of bad faith tactics. Legal professionals are skilled in assessing these situations and can strengthen your case to help you recover the damages you’re owed.
As the insured, you entered into an ethical agreement with your insurance company, and you can take action if you suspect your insurance company has acted in bad faith and violated your rights. If you’ve been struggling with your insurance company, it may be time to seek legal advice.
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