Basics of Bad Faith Insurance
Insurance policies are designed to safeguard individuals against financial setbacks due to accidents, damages, or injuries. However, at times, insurance companies might not fulfill their end of the deal, leading to possible legal actions known as bad faith insurance lawsuits. If you’re wondering whether you have a case, the following comprehensive guide offers insight.
At the core of every insurance contract is an implicit agreement that both parties will act in good faith and fairness. If an insurance company breaches this inherent trust, it paves the way for policyholders to file a bad faith insurance claim. Significantly, these claims fall under the tort category, allowing plaintiffs to potentially claim higher damages than the contract’s value.
Identifying Bad Faith Actions
It’s essential to note that pinpointing bad faith actions isn’t always straightforward. Court decisions, based on state regulations, often define them. However, some common instances include:
- Intimidating the insured party.
- Failing to defend against third-party claims.
- Misinterpreting the insurance agreement.
- Inadequate investigation of valid claims.
- Unwillingness to propose a fair settlement.
- Procrastination in managing claims.
Building a Solid Case
Bad faith insurance claims draw from both common law (derived from judicial decisions) and statutory law (established by legislatures). The approach and potential claims might differ based on the jurisdiction. Two primary avenues for action are breach of contract and tort claims:
- Breach of Contract: Here, plaintiffs argue that the insurer didn’t honor the contract, such as not providing promised coverage.
- Tort Action: Claimants must demonstrate that they were denied rightful policy benefits and this denial was unreasonable, causing harm.
Regardless of the approach, the goal is to secure compensatory damages to compensate for losses suffered due to the insurer’s behavior.
Key Considerations
When considering legal action, ponder the following questions before consulting an attorney:
- What’s required to substantiate a case?
- What kind of damages can one seek?
- Will the losing side cover legal expenses?
- Can one file both a bad faith insurance and a breach of contract case?
- What’s the attorney’s fee structure?
The Importance of Legal Counsel
Given the complexities and variations in state-specific laws, consulting an experienced lawyer is crucial. They can navigate the legal maze, procure essential documents, engage witnesses, and even mediate a settlement if desired. By handling all administrative tasks and anticipating potential issues, they ensure your case progresses smoothly, providing peace of mind.