Wisconsin Bad Faith Insurance Laws

• Wisconsin Statutes: Insurance § 628.46. Timely payment of claims
• Wisconsin Statutes: Insurance § 601.41. General duties and powers
• Wisconsin Administrative Code: Section 6.11, et seq.

Any of the following acts, if committed without just cause and performed with such frequency as to indicate general business practice, shall constitute unfair methods and practices in the business of insurance:

1. Failure to promptly acknowledge pertinent communications with respect to claims arising under insurance policies.
2. Failure to initiate and conclude a claims investigation with all reasonable dispatch.
3. Failure to promptly provide necessary claims forms, instructions and reasonable assistance to insureds and claimants under its insurance policies.
4. Failure to attempt in good faith to effectuate fair and equitable settlement of claims submitted in which liability has become reasonably clear.
5. Failure upon request of a claimant, to promptly provide a reasonable explanation of the basis in the policy contract or applicable law for denial of a claim or for the offer of a compromise settlement.
6. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverages involved.
7. Failure to affirm or deny coverage of claims within a reasonable time after proof of loss has been completed.
8. Failure to settle a claim under one portion of the policy coverage in order to influence a settlement under another portion of the policy coverage.
9. Except as may be otherwise provided in the policy contract, the failure to offer settlement under applicable first party coverage on the basis that responsibility for payment should be assumed by other persons or insurers.
10. Compelling insureds and claimants to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them.
11. Refusing payment of claims solely on the basis of the insured’s request to do so without making an independent evaluation of the insured’s liability based upon all available information.
12. Failure, where appropriate, to make use of arbitration procedures authorized or permitted under any insurance policy.
13. Adopting or making known to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.

Any of the following acts shall constitute unfair methods and practices in the business of insurance:

1. Knowingly misrepresenting to claimants pertinent facts or policy provisions relating to coverages involved.
2. Failure to make provision for adequate claims handling personnel, systems and procedures to effectively service claims in this state incurred under insurance coverage issued or delivered in this state.
3. Failure to adopt reasonable standards for investigation of claims arising under its insurance policies.
4. Violating the requirements established in § 632.85 (coverage without prior authorization for treatment of an emergency medical condition)

An insured individual (plaintiff) must prove the following in order to establish a legal claim of bad faith insurance (Anderson v. Continental Ins. Co., 85 Wis.2d 675, 691 (1978)).

1. The absence of a reasonable basis for the insurance company’s denial of benefits; and
2. The insurance company’s knowledge or reckless disregard for the lack of a reasonable basis for denying the claim.

Filing an Insurance Complaint (Wisconsin Commissioner of Insurance)