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Bad Faith Insurance Attorney

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When you’re involved in a car accident, your first instinct is to rely on your auto insurance to cover the damages. Policyholders trust their insurance providers to act fairly, investigate thoroughly, and pay valid claims promptly. However, not all insurance companies act in good faith. When an insurer fails to uphold its responsibilities, engaging in dishonest or unreasonable behavior, it may be operating in what’s known as bad faith.

Bad faith insurance practices can leave policyholders without the coverage they were promised and can force them into unnecessary legal battles. Often, this results in months of delays, stress, and financial hardship while waiting for a fair settlement that should have come without resistance. If you find yourself in this situation, you’re not alone, and you do have legal options.

What is a Bad Faith Insurance Practice?

Bad faith insurance refers to any attempt by an insurance company to avoid fulfilling its contractual obligations to its policyholders. Insurance companies have specific legal duties to the people they insure. These include:

  • The duty to investigate claims thoroughly and fairly.
  • The duty to indemnify, which means paying valid claims up to the policy limits.
  • The duty to defend the policyholders in legal actions related to the claim.
  • In some states, the duty to settle claims reasonably to avoid unnecessary litigation.

Failure to fulfill any of these responsibilities, along with a breach of the implied duty of good faith and fair dealing, can lead to a bad faith insurance lawsuit. Let’s examine each of these duties in more detail.

1.    The Duty to Investigate

When an insurance claim is filed, the insurer is legally required to investigate it fully and promptly. This means gathering all relevant facts, inspecting property damage, speaking to witnesses and reviewing documentation. If an insurer ignores critical evidence, delays the investigation without valid reason, or refuses to investigate at all, they have breached the duty to investigate, which is a clear sign of bad faith.

2.    The Duty to Indemnify

The duty to indemnify means that an insurer must pay for valid claims according to the terms of the policy. This includes paying damages up to the insurance policy coverage limits. Refusing to pay a legitimate claim without justification or unreasonably undervaluing a claim may indicate that the insurer is failing to meet this duty.

3.    The Duty to Defend

When a policyholder is sued in connection with a claim covered under their policy, the insurer typically has a duty to provide legal representation or cover legal costs. This is especially critical in cases involving liability. While some policies may contain exclusions, insurers generally must step in to defend the insured. Failure to do so may be another breach of duty, especially when the claim is clearly covered.

4.    The Duty to Settle

In some states, insurers have a legal obligation to settle claims when it is reasonable to do so, especially if going to trial would put the policyholder at further risk or financial harm. Insurance companies that unreasonably force a case to court instead of settling may be acting in bad faith.

Each state has its own specific laws regarding bad faith practices. However, all states have a state department of insurance, most of which will give you legal advice and information on bad faith insurance cases. If you believe your insurer is dealing in bad faith, it is important to consult an attorney immediately.

Examples of Bad Faith by Auto Insurers

Bad faith can appear in many forms and all types of insurance (home, health, life, etc.). Below are common examples of how auto insurance companies may act in bad faith:

  1. Unjustified Claim Denials – Denying a valid claim without a legitimate reason or without a proper investigation. This can include ignoring evidence or citing vague policy language to avoid payout.
  2. Delaying Payment Unreasonably – Dragging out the claims process with excessive paperwork, repeated requests for the same information, or unexplained silence. These tactics are often used to wear down the claimant into accepting a lower settlement.
  3. Failing to Investigate Promptly/Thoroughly – Ignoring key facts, not talking to witnesses, not inspecting the vehicle or property damage, or ignoring supported documents submitted by the claimant.
  4. Offering Unreasonably Low Settlements – Offering compensation that is significantly lower than what the claim is worth, even when evidence clearly supports a higher value.
  5. Misrepresenting Policy Terms – Providing false or misleading information about what the policy covers. This may include telling policyholders that certain damages are excluded when they are actually covered, or manipulating policy language to deny claims.
  6. Failing to Communicate – Failing to respond to calls, emails, or claim updates in a timely manner. Avoiding direct communication is a stalling tactic.

Legal Consequences for Bad Faith

If an insurance company acts in bad faith and is found guilty, they may be held legally accountable for more than just the original claim amount. Courts may award:

  • The value of the original claim that should’ve been paid.
  • Consequential damages, such as costs incurred due to the delay (rental car fees, lost wages, towing/storage costs, etc.)
  • Punitive damages, in cases where the insurer’s actions were extreme, to punish and deter future misconduct.
  • Attorney’s fees and court costs, helping the policyholder recover the expenses of taking legal action.

These penalties exist to discourage insurance companies from acting in bad faith and to protect consumers from being taken advantage of during vulnerable moments.

What You Should Do If You Suspect Bad Faith

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Time is critical in bad-faith insurance cases. Most states have strict statutes of limitations, meaning there is a deadline by which you must file your claim. The sooner you act, the better your chances of building a strong case.

Here are the steps you should take if you suspect your insurer is acting in bad faith:

  1. Document everything – Keep detailed records of every interaction with your insurance company. This includes emails, phone calls (with dates and times), letters, claim submissions, policy documents, and notes from conversations. Documentation is key in proving a bad faith claim.
  1. Request a Written Explanation – Ask your insurance company to explain any delays, denials, or decisions in writing. They are often required by law to provide justification. If they refuse or their explanation is vague/inconsistent, that may support your case.
  1. File a complaint – Submit a complaint to your state’s Department of Insurance. WHile this may not resolve your issue immediately, it adds pressure on the insurer and creates a formal record of the dispute.
  1. Consult a lawyer – This is the most important step. A qualified bad faith insurance lawyer can evaluate your situation, help you understand your legal options, and represent you. They know how to navigate the legal system and hold insurers accountable for unfair practices.

Conclusion

Dealing with the aftermath of a car accident is stressful enough without the added burden of fighting your own insurance company. Understanding your rights, recognizing bad faith behavior, and acting quickly can make all the difference. If you believe your auto insurer is engaging in bad faith practices, don’t wait. Speak with an attorney as soon as possible. Insurance companies are legally required to act in good faith, to investigate claims honestly, communicate clearly, and fairly distribute payouts. When they don’t, you have the right to fight back.

The Advocates personal injury attorneys are here to help you do just that. We are experienced attorneys here to guide you through the physical and emotional distress while providing you with the best possible outcome. Being personal injury lawyers, The Advocates will help you hold bad faith insurers accountable, making sure you aren’t taken advantage of during one of the most stressful times in your life. If you suspect your insurance company is acting in bad faith, don’t go through it alone – call The Advocates for a free consultation.