While investigating personal injury claims and negotiating settlements, insurance companies and their representatives are required by law to act in good faith toward policyholders and third-party claimants. The term good faith generally describes honest and fair dealing. This means that insurance companies must refrain from engaging in unfair dealing or fraud.
If an insurance company acts in bad faith toward its own insured, the insured may have the right to file a lawsuit against the insurance company. This type of lawsuit is separate and distinct from a personal injury lawsuit, which is filed directly against a party at fault for an injury-causing accident. Because filing a bad faith lawsuit against an insurance company requires special skill and training, as well as a thorough knowledge of the laws and legal system, you should never file a bad faith insurance lawsuit without assistance from a qualified lawyer.
Many different types of unfair insurance company tactics may constitute bad faith. This page provides basic information about bad faith insurance practices and how to respond to them. If you believe that an insurance company has acted in bad faith with respect to your personal injury claim, contact a lawyer with experience litigating bad faith insurance claims right away.
Examples of Bad Faith Insurance Practices
As discussed above, bad faith is broadly defined as dishonest or unfair dealing. Examples of bad faith practices by insurance companies in the context of personal injury claims include, but are not limited to:
- Denying payment for a valid claim without a reasonable basis;
- Discounting payment for a valid claim without a reasonable basis;
- Making a settlement offer that is unconscionably low and unsupported by the factual record;
- Delaying payment for a valid claim without a reasonable basis;
- Failing to affirm or deny coverage of claims within a reasonable time frame;
- Ignoring telephone calls, letters, and emails about a valid claim;
- Using rude, threatening, abusive, or intimidating tactics;
- Failing to conduct proper, prompt, and thorough investigations into a valid claim;
- Making overly burdensome requests for documentation in support of a valid claim;
- Refusing to give a basis for a settlement offer or claim denial; and
- Misrepresenting the law or policy language.
You should be aware of these tactics and keep them in mind when dealing with the claims adjuster and other insurance company representatives. Understanding what tactics constitute bad faith can help you deal with bad faith insurance tactics more effectively.
How to Deal With Bad Faith Insurance Tactics
The best way to deal with bad faith insurance tactics is to carefully document all of your interactions with the claims adjuster. While you are negotiating your claim, you should keep a journal of any correspondence you have with the insurance company, whether over the phone, by mail, or online. If you believe the claims adjuster has acted in bad faith, write down a detailed descriptions of his or her actions and the date on which they occurred.
You should also ask the claims adjuster to provide written documentation stating the reasons for his or her actions. If the claims adjuster refuses to comply with your request for documentation, you should send the insurance company a letter via certified mail, return receipt requested.
In your letter, note the date of your conversation with the claims adjuster and inform the insurance company that you believe the claims adjuster has acted in bad faith. Be sure to state which actions you believe were taken in bad faith, and note the claims adjuster’s failure to comply with your previous demand for documentation. Your letter will send a clear message to the insurance company that you will not tolerate inappropriate (and illegal) negotiation tactics. You will also have created evidence of bad faith in the event you and your lawyer decide filing a bad faith lawsuit against the insurance company is necessary.
The more detailed your notes about your interactions with the insurance company are, the more likely you are to prevail in a bad faith lawsuit against the insurance company. If you believe the insurance company has acted in bad faith, call an experienced bad faith insurance lawyer right away. Many personal injury lawyers have experience litigating bad faith claims against insurance companies.
Filing a Report With a State Insurance Board
If you believe that an insurance company has acted in bad faith with respect to your personal injury claim, you can also file a report with the insurance board in your state. Every state has an insurance board, although the official name of the board varies from state to state. You can find the contact information for your state’s insurance board here:
State Insurance Boards
Each state insurance board has a procedure for reporting insurance companies for bad faith practices. Once you file a report, the state insurance board will begin an investigation into your complaint. If the state insurance board finds evidence of bad faith, the state will notify the insurance company and may fine the insurance company if it does not remedy the problem.
It is important to understand that the state insurance board cannot require an insurance company to pay or settle specific claims. In order to secure compensation for the harm the insurance company has caused you by acting in bad faith, you may need to hire a lawyer to represent you in a bad faith insurance lawsuit against the insurance company. To learn more about hiring a lawyer, visit:
- Frequently Asked Questions about Hiring an Attorney
- Questions to Ask When Interviewing Attorneys
- Choosing an Attorney: The Professional Awards and Affiliations That Matter
Disclaimer: Information provided on this site is NOT formal legal advice. It is generic legal information. Under no circumstances should the information on this site be relied upon when deciding the proper course of a legal action. Always get a formal case evaluation from a licensed attorney if you think you might have a personal injury lawsuit.