An auto accident can be one of the most frightening and stressful experiences that a person will ever go through. Many victims of auto accidents suffer physical injuries that can take months or years to resolve; in some cases, the injuries last a lifetime.
Then there’s property damage. Is there really anything else that could make an already terrible situation worse? Unfortunately, in some cases, the answer is yes—and it’s called “bad faith” insurance.
What is bad faith insurance?
When you submit an insurance claim to an insurance company, that company has an obligation to act in good faith. This obligation goes further than the insurance company’s own “values”. The obligation is the law.
Yes, that’s right: insurance companies are required by law to act in good faith.
If an insurance company’s claim adjuster were to violate his or her duty to act in good faith, it would constitute bad faith.
Who is the insurance claims adjuster?
Claims adjusters are trained professionals who receive specialized training in the evaluation of insurance claims; these folks are hired to process insurance claims that are filed with the insurance company.
When investigating a claim, the adjuster systematically specifies any reasonable reason to deny the claim. The adjuster determines if their policy-holder caused the accident leading to the insurance claim. If the adjuster finds that their insured did cause the accident, then they are responsible for determining the amount that the insurance company will pay out to settle the claim.
Unfortunately, some adjusters will find just about any way to minimize payment as much as possible, or to deny the claim altogether. In most cases, this amount is the lowest amount that can be justified by the claims adjuster.
What does it mean to “act in bad faith”?
“Bad faith” is a legal term that describes when an insurance company denies an insurance claim without a reasonable basis for doing so.
Insurance companies are required by law to investigate, negotiate, and settle insurance claims in good faith. Insurance policies are contracts. Policy holders (you) pay premiums for insurance policies. These premiums are the policy holder’s part of the agreement in order to be “covered” by their insurance company in the event of a car accident.
The definition of “coverage” to be provided by your insurance policy is found within the policy language. You’ll find your policy limits (the amounts up to which your insurance company will provide coverage) stated there, too.
Included automatically in every auto insurance contract is the implied covenant of good faith and fair dealing, which is defined by Cornell Law School as:
An implied obligation that assumes that the parties to a contract will act in good faith and deal fairly with one another without breaking their word, using shifty means to avoid obligations, or denying what the other party obviously understood.
Claimants—the individuals who file insurance claims—often believe that the insurance company has:
- Interpreted the agreed-upon “coverage” too narrowly and/or
- Interpreted the required terms and conditions too broadly in order to limit the amounts paid to claimants.
How do you know if the insurance company is acting in bad faith?
The line between good faith and bad faith is a fine one. Unfortunately, there’s no quick checklist that you can consult to identify whether or not your assigned claims adjuster is acting in bad faith. However, here are just a few examples that may demonstrate bad faith tactics:
- The insurance claims adjuster makes an unreasonably low offer as a result of unfairly evaluating a claim.
- The insurance company denies a claim without a reasonable reason to do so. This may include denying coverage without first investigating the claim.
- Insurance companies are required to conduct thorough and prompt investigations into auto accident insurance claims. Refusal or failure to investigate the insurance claim or failure to present a written explanation which clearly states the reasonable reasons for denial of the claim may constitute bad faith. This may include delaying investigation into the claim and/or conducting a poor investigation.
- Insurance companies are required to pay out insurance claims within a reasonable time frame. If the auto insurance company has approved your valid auto accident claim, yet has unreasonably delayed paying out the claim, then you may have a claim against the auto insurance company for bad faith.
- The insurance company purposely delays your valid auto insurance claim by re-assigning insurance adjusters.
- The insurance company intentionally withholds information relevant to your claim.
- The insurance company improperly cites the law in order to lessen or deny your claim.
When an insurance company does not uphold their duty to act in good faith and fair dealing to their insured, a claim can be brought against the insurance company for its bad acts. When faced with this situation, an attorney experienced in handling bad faith insurance cases can help.
At Baskerville Law, we provide advice and consultation regarding coverage issues with insurance companies. We understand the obligations of insurance companies and what stands in court as “unreasonable” actions.
If your insurance company is denying, delaying or disregarding your claims, we want to hear your story and help. Call or text us at (505) 247-2774 for a free, no-obligation case evaluation.