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Do I Need a Bad Faith Insurance Lawyer?

You may need a bad-faith insurance lawyer if your insurance company is not holding up its end of the bargain under your insurance policy. You bought insurance, and you've been paying your premiums. You expect your insurance company to pay according to your insurance coverage, but what if your insurance carrier refuses to do so?

If your insurance company unfairly denies your claim, isn't communicating with you, or is pressuring you to accept an unreasonable settlement offer, you may have a bad faith insurance claim.

Bad faith on the part of your insurer can occur no matter what type of insurance you have. Read on to learn more about bad faith insurance law and how an experienced bad faith attorney can help you.

What Is Bad Faith?

Bad faith insurance claim lawyers protect policyholder rights when an insurer denies a valid claim without a reasonable basis. To know whether you need a bad faith insurance lawyer, you first need to understand what bad faith means in the insurance context.

A bad faith claim applies to any type of insurance policy. This includes:

  • Health insurance
  • Life insurance
  • Disability insurance
  • Homeowners' insurance
  • Auto insurance

Every insurance company must act in good faith and treat clients fairly. This doesn't mean that they have to pay every claim they receive, but the insurer can't search for ways to deny claims. An insurer must explain why they refuse to cover a claim or partly cover to avoid acting in bad faith.

Ways an Insurance Company Might Act in Bad Faith

Whether you've filed a claim for property damage, physical injuries, life insurance benefits, or being sued for something your liability insurance could cover, your insurer has specific duties it must fulfill to avoid acting in bad faith. Although they vary from state to state, in general these duties include the following:

  • Respond to client inquiries and correspondence promptly
  • Conduct timely and reasonable investigations into claims
  • Approve, deny, and pay claims within a reasonable or state-specific timeframe
  • Explain claim denials, citing specific policy provisions applicable to the denial
  • Defend the insured in a liability action where at least one of the claims is potentially covered by the insurance policy
  • Pay for damages in a liability action up to the policy limits

If your insurance company is failing in these duties despite your working with them to reach a fair agreement, it's probably time to contact a bad faith insurance lawyer. They can handle all future correspondence with the insurance company.

What Are Bad Faith Insurance Practices?

Bad faith insurance refers to insurance companies' tactics to avoid their contractual obligations to their policyholders. A bad faith insurance case can take many forms. Examples of insurers acting in bad faith include the following:

  • Misrepresentation of contract terms and language
  • Nondisclosure of policy provisions, exclusions, and terms to avoid paying claims
  • An adjuster refusing to provide reasonable support for findings
  • Ignoring evidence supporting the policyholder's basis for making a claim
  • Failing to reply to a policyholder's claim promptly

Simple mistakes do not constitute bad faith.

Regulation of the Insurance Industry

States regulate the insurance industry according to state law. Each state regulates the industry in a different way, but the general obligations of good faith and fair dealing exist no matter where you live.

States have enacted laws to protect consumers from insurance companies' bad faith practices, sometimes referred to as unfair claims practices. If an insurance company acts in bad faith, it may face a lawsuit with expensive consequences, fines, and other penalties from the state insurance commissioner.

Making a Claim for Bad Faith

A legal claim takes the form of an insurance bad faith insurance claim against the insurer for violating its duty of good faith and fair dealing.

Insured individuals may also pursue breach of contract claims when the insurer explicitly violates the contract terms. There is substantial overlap between bad faith claims and breach of contract claims.

Other causes of action may include:

  • Violations of fraud statutes
  • Violations of insurance codes
  • Estoppel (reliance on the words or conduct of an individual rather than a written agreement) for an agent's misrepresentation of coverage

It always pays to understand your rights and obligations as a consumer concerning insurance claims.

How Can a Bad Faith Insurance Lawyer Help You?

Pursuing a bad faith insurance action is no small undertaking. Bad faith lawsuits take a lot of time, resources, and persistence. If you're considering such a pursuit, there are many reasons to hire a bad faith insurance lawyer.

Each state has different laws. Your case would have the best chance of success if you had an attorney familiar with the state laws of your jurisdiction on your side. They can tell you whether or not your insurance company's actions amount to bad faith.

An experienced attorney will:

  • Know how courts have interpreted your state's bad faith laws
  • Explain legal options based on your likelihood of success in a lawsuit based on the specifics of your case
  • Know how much to demand in a lawsuit
  • Explain alternatives to a lawsuit

States also vary on the types and amounts of damages allowed. A bad faith insurance attorney will know what damages to demand.

Compensation and Attorney's Fees

Many bad faith insurance lawyers will work on a contingency basis. That means you only pay if you win your case and recover damages. Some states require an insurance company acting in bad faith to pay basic damages to compensate the victim for having a claim denied, above and beyond the amount owed under the claim.

You may be able to recover non-economic damages and attorney's fees. A jury may award punitive damages if you win your lawsuit and they find that the insurance company acted in an egregious manner. If the insurance company makes a mistake, the remedy may be only to pay the claim.

Let a Bad Faith Insurance Lawyer Defend Your Rights

Whether a loved one has died, your home or car was damaged, or you've been injured, the insurance claim process can be complex. An insurance claim attorney can provide a free case evaluation. They can help determine if you have a legitimate claim.

Going up against a well-equipped company for bad faith practices takes training and experience. If you've decided to pursue a bad faith lawsuit, or you're simply considering your options, contact an experienced bad faith insurance lawyer who can advocate on your behalf and protect your interests.

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