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Bad Faith Insurance: Do I Need a Lawyer?

Insurance policies help us feel safe in the event of unforeseen circumstances such as getting hurt in an accident or sustaining damage to our homes. However, some insurance companies put profits before their policyholders, unreasonably denying, delaying, or reducing claims. This practice is called bad faith insurance. Without a lawyer by your side, you could struggle to get what you deserve.

An insurer is legally obligated to honor a valid claim and facilitate an adequate and timely settlement. If you have been messed around by an insurer, we could help. Our experienced insurance attorneys can analyze your case and policy to determine whether you have a bad faith insurance claim. You could be entitled to compensation exceeding your original claim amount. Contact us now for a free case review. 

What Is “Bad Faith”? 

An insurance company generally must act in good faith and honor a legitimate claim. Not doing so could count as bad faith insurance. Bad faith insurance claims can arise because an insurer unreasonably denies or delays your claim. Unfortunately, some insurance companies deny claims right away, making it tough for policyholders to get their due without an attorney by their side. Policyholders may even have to sue the insurance company to get what they are entitled to. Generally, there are two types of bad faith claims, a first-party and a third-party claim.

First-Party Bad Faith Insurance 

A first-party bad faith insurance claim can arise when your insurance company is not paying up. Bad faith can occur with various insurers, including car insurance, health insurance, and homeowners’ insurance. If you sustained damages that are covered under your policy and your insurer refuses to investigate the claim or simply resists a payout, you could potentially sue them.

Third-Party Bad Faith Insurance

A third-party bad faith insurance claim commonly arises when another party’s insurance company is responsible for compensating you, for example, after a motor vehicle accident. If the insurer refuses to settle, you or the insured party could take the insurance company to court for bad faith. 

When You Should Consider Hiring a Lawyer

Generally, getting what you deserve from an insurer without an attorney in your corner can be challenging, especially if your claim has already been denied. Insurers often try to get out of paying valid claims by delaying or denying claims, hoping policyholders give up fighting for their due. The sooner you have a bad faith insurance lawyer on your side, the sooner you could receive the payout you deserve. Consider seeking legal advice when an insurance company:

  • Ignores your claim
  • Refuses to investigate your claim
  • Fails to notify you of additional information needed to process your claim
  • Offers a lowball settlement amount
  • Denies your claim without an explanation
  • Determines your proof of loss as inadequate
  • Failed to explain policy exclusions before policy purchase
  • Charges a higher premium after you file a claim
  • Cancels your policy abruptly
  • Fails to reach a settlement despite clear liability 
  • Uses threatening or abusive tactics to push you into accepting a settlement

It is simply wrong that some insurance companies are not upholding their end of the deal when you have paid premiums for months or even years. If this has happened to you, do not hesitate to consult with an insurance disputes lawyer about your options for getting what you deserve.  

Not all Denied or Delayed Claims Count as Bad Faith 

There can be many legitimate reasons for a denied, delayed, or reduced claim. The following scenarios do not generally count as bad faith insurance:

Differences in Opinion About the Loss Amount

According to Investopedia, a difference in opinion between an insurance adjuster and a policyholder regarding the loss amount does not usually constitute bad faith unless an adjuster has no proof for their findings. 

Exclusions in Coverage

If the damages you or your property sustained were not covered under your insurance policy, claim denial is usually legitimate. 

Your Proof of Loss Is Inadequate

A delay in claims processing is not unusual if you do not provide adequate proof of your losses. You could also have problems getting a claim approved if an insurance adjuster disputes your version of events or calculated a vastly different loss amount. 

Liability Is Contested

Fault for a car accident, for example, is not necessarily clear-cut. The drivers’ insurance companies may not agree on who is liable and responsible to pay out a claim. 

Insufficient Medical Evidence 

If you failed to visit a doctor promptly after an accident, you might not be able to prove that your injuries are due to a crash.  An insurer could refuse payment for your medical bills if you do not have medical reports clearly stating that your injuries result from the accident in question. 

Sometimes, it can be challenging to determine whether your insurer acted in bad faith. Most insurance contracts are written in a hard-to-understand language and contain pages after pages of clauses and exclusions.  A bad faith insurance lawyer can review your policy carefully to determine whether your claim was unfairly denied or delayed and whether you have legal recourse against the insurance company. 

A Lawyer Can Help Fight Bad Faith Insurance

Unfortunately, bad faith insurance is not uncommon. An experienced insurance dispute lawyer can help you fight back against an unscrupulous insurance company. However, before you file a lawsuit, consider the following steps:

Working With the Insurance Company 

In some cases, rather than immediately turning to the law, working with the insurance company can be advantageous. Ensure to comply with all requests for information and provide proof for your losses as required. Demonstrating your willingness to work with your insurer can also help with your case later on if you have to sue. If your insurance company is unwilling to settle, you have done everything possible to resolve the situation in good faith. 

Filing a Complaint Against the Insurance Company

Insurance regulations and laws tend to be enforced by state rather than federal laws.  Therefore, you can potentially file a complaint against your insurance with your state’s Department of Insurance. The departments usually try to resolve insurance complaints with mediation. 

Filing a Bad Faith Lawsuit

Sometimes, policyholders have no choice but to file a lawsuit against the insurance company to get their settlement. An experienced bad faith insurance attorney at Morgan & Morgan can assess your case, walk you through your options, and, if all else fails, move forward with filing a lawsuit against the insurance company. 

Bad Faith Insurance Cases We Handle

Morgan & Morgan’s bad faith insurance attorneys can fight for the rights of policyholders in various cases, involving: 

  • Auto insurance
  • Personal injury protection insurance (PIP)
  • Health insurance
  • Homeowner’s insurance
  • Life and accidental death insurance
  • Automobile insurance
  • Long-term care insurance
  • Commercial property insurance
  • Aviation or boat insurance

We can also handle other bad faith claims. If you are unable to get what you deserve with a first or third-party insurance claim, we could help you hold the insurance company accountable. 

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