A Bad Faith Insurance Claim Lawyer Tells Them You Mean Business
Insurance is a fundamental element of our lives. Most people have insurance, whether it’s car insurance, home insurance, life insurance, health insurance, business interruption insurance, or another kind. Because insurers play such an important role in society, the law imposes on them a duty to act in good faith toward the people they insure. But that doesn’t always happen.
For example, if an insurance company automatically rejected every claim that came in over a certain dollar amount, this easily could be an example of bad faith. The company is not investigating claims and making decisions on the merits. Instead, their blanket policy would ensure that valid claims go denied.
Insurance companies must be held accountable if they’ve allowed greed to overcome their duty of paying out on valid claims. Thankfully, the law imposes the good faith duty and the courts provide a means of enforcing it.
What Constitutes a Bad Faith Insurance Claim?
An insurer is generally liable for a bad faith claim if they refuse to recognize and pay out on a valid claim.
To win your claim, you must prove that the insurance company deviated from its duty to treat you fairly and honestly. Not every tactic insurance companies employ is bad faith. For example, an insurance company generally has no obligation to tell you about coverage you didn’t realize you had under your policy. On the other hand, actively misrepresenting the scope of a policy’s coverage could be actionable bad faith.
What Are Some Signs of Bad Faith Insurance Claims Settlement Practices?
Some signs of bad faith insurance tactics to watch out for include:
- Delays with no adequate reason provided
- A denial with no explanation
- Repeatedly asking you to submit documents you’ve already submitted
- Asking you to obtain impossible proof
- Refusing to process or investigate your claim
- Threats, manipulation, or intentional confusion
State Farm Insurance Bad Faith Claims
One iconic case featuring bad faith by State Farm illustrates the possible stakes for the insurance company if it can be shown they acted improperly. In this case, State Farm refused to pay out on their insured’s policy after he negligently caused a fatality while driving. Despite the fatal circumstances, the victims offered to accept the $50,000 policy limit as their wrongful death settlement. Instead, State Farm decided to contest the claim.
State Farm lost at trial and the jury awarded the victims more than $185,000. After the loss, State Farm told their client that they would cover only $50,000 of the judgment, the policy limit, and that he would have to cover the rest personally.
The insured driver retained an attorney to make a bad faith insurance claim. The jury agreed that State Farm had acted in bad faith and awarded the plaintiff $145 million in punitive damages. The verdict sent a message that denial by insurance companies for the sake of denial won’t be tolerated.1
Allstate Insurance Bad Faith Claims
State Farm is far from the only large insurer to be sued for failing to fulfill their duty. In one bad faith homeowners’ insurance claim, a judge found that Allstate had no justification for repeatedly delaying payment to their client.
After an Allstate client’s home burned down in 2019, she promptly submitted her claim. Allstate paid the plaintiff a small settlement, much less than the amount the damage had been appraised for. The two sides fought for more than a year on how much the property damage was worth before agreeing to let a neutral party make a determination. Then, Allstate suddenly withdrew from the process, saying they were disputing the cause of the fire — without offering any new evidence.
The judge for the case couldn’t find any evidence to back up the change in position either. The sad truth is that some insurance companies may string along their client until desperation sets in and they accept a lower settlement than they deserve. The insurance company has nearly limitless funds, while the victim, as with the homeless woman in this case, may suffer the daily effects of their unpaid claim.
American Family Insurance Bad Faith Claims
In one case of American Family Insurance bad faith, an individual they insured had purchased over $1 million in underinsured motorist coverage (UIM) in the event of a serious injury. Unfortunately, that injury came when the insured woman was rear-ended and ultimately suffered a debilitating stroke. After the other driver’s insurance paid out up to their policy limits, the woman turned to American Family to draw on her UIM coverage for the remainder of her medical bills.
American Family offered $200,000 to settle losses calculated at well over $1.1 million. The bad faith is this: even their internal expert calculated losses at $500,000. Offering less than that at the bare minimum was a complete deviation from their obligation to act fairly. To punish American Family for their behavior, an arbitration panel awarded the plaintiff more than $2.5 million in compensation.1
Other Kinds of Bad Faith Insurance Claims
In addition to the homeowners and auto insurance types of claims discussed above, bad faith behavior by insurance carriers often arises for three other types of insurance coverages.
Life Insurance Claims
When a beneficiary claims a life insurance policy, the insurance company might act in bad faith to save money. For example, they might open an investigation into the deceased’s medical history. If they can find that their insured misrepresented something important, they can potentially avoid paying any death benefit.
When an insurer conducts an investigation like this with no factual basis, but just in the hopes that something might be found that could save them money on a payout, the company is likely acting in bad faith. Also, if they have no genuine dispute but conduct the investigation just to cause you painful delay, you may be entitled to compensation.
Health Insurance Claims
If an insurer maliciously denies your claim, your medical bills could be crushing. Some insurers may send a low settlement offer they know drastically and unreasonably undervalues your claim. The worst case scenario can be when an unreasonably denied claim forces the insured to go without needed medical care. Your insurer has a duty to you, but some may not always live up to that standard.
Business Interruption Insurance Claims
Business owners rely on this kind of coverage to keep them from going under in the event an emergency disrupts their ability to make a living. As with all bad faith claims, a legitimate dispute by the insurance carrier is not bad faith. However, unjustified denials and excessive delays are bad faith practices an insurer may sometimes use to browbeat their insured into taking less than they deserve. If you’re a victim, it may be time to file a business litigation claim.
When Should I Hire Bad Faith Insurance Claim Lawyers?
If you’re claim is being denied by the insurance company, there are two possible explanations. Either they have a good faith dispute about your coverage or they’re acting in bad faith to try and pay you less (or nothing). In either of these scenarios, you want an attorney in your corner right now to help you fight for everything you may be entitled to.
Here are three more great reasons to get your free case evaluation from one of our attorneys as soon as possible:
- Level the playing field: The insurance company and their adjusters have their own agenda, and they’re looking to protect their best interests. You want an attorney to help you navigate pitfalls and traps in trying to negotiate with the other side.
- Act before evidence is lost: Documents can get misplaced, misfiled, or intentionally destroyed. The best time to start building your case is immediately.
- It won’t cost you more: Thanks to our contingency fee arrangement, you pay nothing up front to get an experienced attorney in your corner right now. If we’re not successful in recovering compensation for you, you pay no attorney’s fee at all.2
Note: We offer the contingency fee option and will also consider hourly fees, set fees, or a hybrid of all three fee structures.
What Can a Bad Faith Insurance and Claim Denial Lawyer Do for Me?
Your skilled advocate can help you pursue the compensation you may deserve. Compensation could include:
- Economic damages, such as your out-of-pocket cost to cover the denied claim
- Non-economic damages, such as emotional distress
- Punitive damages, in order to incentivize the insurance company to correct their behavior
In addition to pursuing maximum compensation on your behalf, your attorney can:
- Walk you through complicated laws and processes
- Take care of stressful communication and paperwork on your behalf
- Keep you in the loop throughout the life of your case, communicating with you as often as needed
- Front all expenses so you have access to justice
- Aggressively seek out any evidence and witnesses who can support your claim
- Draw on resources, such as outside experts as necessary, to try to build an ironclad case
- Fearlessly take your case to trial if needed
Why Should I Choose the Law Offices of James Scott Farrin?
Since we opened our doors in 1997, we’ve helped more than 55,000 valued clients recover over $1.4 billion in much-deserved total compensation.1
No matter who you’ve been harmed by, our litigation attorneys are the powerful advocates you’re looking for. From negotiation to litigation, we have the talent and resources to fight as long and as hard as it takes.
Learn More: See how complex the litigation got as we recovered $1.25 billion in our landmark civil rights victory.1
Attorney Profile: Gary W. Jackson
“My role is to fight for those who have been hurt by corporate negligence or misconduct.”
A decorated litigator with a fearsome record, Gary has fought against insurers for nearly a quarter of a century. Every day, he seeks to honor the standard set by his mother, a feisty fighter her whole life.
For 2021, Gary was named both a “Best Lawyer in America” by US News and a “Super Lawyer” by the prestigious Super Lawyers magazine. A respected speaker nationwide, he holds an “AV Preeminent” rating from Martindale-Hubbell and is a Fellow of the highly-prestigious American Bar Foundation.3
3For information regarding standards for inclusion, visit bestlawyers.com, superlawyers.com, and martindale.com.