FAQs
About Bad Faith Insurance Denials
Q: What is bad faith insurance?
A: An insurance policy is considered a contract between you (the Insured) and your insurance carrier (the Insurer). This contract requires that your Insurer act in good faith toward you. When an Insurer unreasonably withholds the benefits of the policy from its Insured, it is considered to be in bad faith.
The Insurer has a duty to deal fairly with its Insureds. Every insurance contract contains an unwritten covenant or promise of good faith imposed by law upon an Insurer to always act fairly towards its Insureds in handling their claims. Insurers must always meet the reasonable expectations of the policyholder as well as give as much if not more consideration to the financial interests of its Insureds than it does to its own financial interests. Some insurers attempt to deny or underpay legitimate claims covered by the insurance policy for any reason they can. Such bad faith practices are illegal in virtually every state because an Insurer may not put its own interest above that of an Insured. Most states have very specific legal remedies that allow consumers to recover penalties for such bad faith in addition to the amount the Insurer should have paid. In addition, many states (such as Georgia) also recognize an action for the negligent denial of a claim. If, for instance, an Insurer negligently or in bad faith refuses to settle a third-party claim against its Insured within the limits of the insurance policy, the Insurer may be liable for any judgment later obtained against its Insured by that third-party.
If you believe that your claim is covered by the written contact between you and your Insurer, you may have a bad faith claim that should be reviewed by an attorney.
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Q: Why do Insurers commit bad faith?
A: There is a very substantial benefit and good economic reason for Insurers to commit bad faith. Insurers receive thousands of claims every day many of which are wrongfully denied. Because very few Insureds dispute wrongful denials of claims or coverage, insurance companies save significant amounts that they are obligated to pay under the terms of the policy. Consider the following example. Assume that an Insurer denies 100 claims that they actually should pay based upon the language of the insurance contract and that ninety of these claims go unchallenged. Also assume that the remaining ten consumers retain attorneys who challenge the denials and, of these ten, the Insurer reverses its earlier decision to deny coverage and agrees to pay nine of these claims. The tenth claimant then files a lawsuit to recover bad faith damages against the Insurer. Even if this claimant who filed suit recovers damages against the Insurer, the insurance company would still likely have saved millions of dollars by not having had to pay the other ninety claims which were denied and not disputed. Thus, some unscrupulous Insurers enjoy substantial profits by continuing to wrongfully deny claims.
For important information about your claim and our disclaimer, click here.
Q: What are some examples of bad faith?
A: There are many examples of how an Insurer can commit bad faith, including failing to promptly and thoroughly investigate a claim, unreasonably delaying payment, unreasonably denying benefits, using unreasonable interpretations in translating policy language, refusing to settle the case or reimburse you for the entirety of your loss, among others. Insurance Bad faith constitutes not only breach of your insurance policy contract with the Insurer but also includes injuries personally sustained outside of the insurance contract as a result. If such a breach exceeds that of being unreasonable and is demonstrated to be dishonest, deceptive or fraudulent, a consumer may be entitled to statutory and punitive damages against the insurance company exceeding compensation for the loss under the policy as punishment for bad faith and to deter similar conduct by the Insurer in the future.
For important information about your claim and our disclaimer, click here.
Q: What should an Insured do in the event of a claim?
A: An Insured should immediately notify the insurance agent about your claim and collect and review the insurance policy as it relates to the relevant provision(s) of the claim. Submit your claim promptly as most state laws and most insurance policies require that claims be presented within a limited period after the loss, otherwise if the Insured waits too long, the Insured loses the right to seek benefit on a claim. It is very important that the Insured document all events, notes and all contacts and communications made, and preserve all written correspondence and documents to and from the Insurer.
For important information about your claim and our disclaimer, click here.
Q: What are an Insured's options when an Insurer denies a claim or coverage?
A: Many claim denials are not the result of bad faith, but authorized based upon the exclusions and limitations contained in the contract between the Insured and Insurer. However, if your claim appears to be covered by the policy between you and the Insurer, then you may have a bad faith claim that should be reviewed by an attorney. When an Insurer denies a claim, a vast majority of people choose to do nothing, which is unfortunate. Many unscrupulous insurance companies deny claims by playing the odds that the Insured will not pursue further action or contact an attorney about the denial. Frequently, when an attorney becomes involved, the insurance company will generally take the claim much more seriously and look to modify and correct its earlier bad faith direction in order to minimize the amount of the claim, potential bad faith implications and its potential losses.
For important information about your claim and our disclaimer, click here.
Q: What can I recover if I sue my Insurer for bad faith?
A: If an Insurer is found to have acted in bad faith, the Insured is entitled to recover the benefits of the policy for the claim and, in many states, may also recover additional damages suffered as a result of the wrongful denial of the claim. This also includes the Insured's attorneys' fees which you had to pay in order to force your Insurer to live up to its contractual obligations and, in cases where the conduct is particularly egregious, intentional, or demonstrates a conscious indifference to the consequences, punitive damages. For example, in Georgia, if an insurance company fails to pay its insured's claim without reasonable cause within sixty days from receipt of a formal demand for payment, the insurance company may now be liable for an additional statutory penalty up to 50% of the amount of the claim, plus reasonable attorney fees.
For important information about your claim and our disclaimer, click here.
Q: Is there a time limit for bringing my claim?
A: Yes. There are statutes of limitations that apply to your claim. You must pursue legal action within the time set forth in the applicable statute of limitation or you may be barred. Statutes of limitations vary from state to state and based upon the type of claim involved. Some insurance contracts also contain shorter "contractual limitation" periods that the insurer may attempt to enforce against you.
What statute of limitations applies to your cases depends on a variety of different factors that must be assessed by an attorney. If you believe that you have a claim, it is important that you promptly contact an attorney to determine the applicable periods of limitation in your individual case.
For important information about your claim and our disclaimer, click here.
Q: How long will this take to be resolved?
A: The length of time a case may take to be resolved depends upon individual factors unique to every action, including the county in which the lawsuit is filed, the defenses involved, the pre-trial discovery that may be necessary, and public or media attention your case may receive.
For important information about your claim and our disclaimer, click here.
Q: What is the first step?
A: If you suspect that your Insurer denied a claim covered by your insurance policy, please contact Huddleston Law Firm or another attorney qualified to evaluate your case as soon as possible. We will schedule a free initial consultation to answer your questions and discuss your case.
During your initial consultation, be sure to bring all records relating to your potential claim and the policy of insurance at issue, including all correspondence between yourself and the Insurer. Our firm can obtain records, including medical records, that are not in your possession.
For important information about your claim and our disclaimer, click here.
Disclaimer: Nothing in this Web site is intended to serve as legal advice. You should not act or fail to act upon a claim based upon any information contained on this Web site.
Every case is different, having different circumstances and different facts. No lawyer can tell you how much you will recover, if anything, in any legal action. There are numerous risks involved in all litigation, including the risk of losing the case. What statute of limitation applies to your individual claim depends upon many factors, including the type of claim and the jurisdiction in which it should be filed.
If you believe you have a claim or have legal questions, you should consult with Huddleston Law Firm or another lawyer about your case immediately. No one at Huddleston Law Firm will take any action on your behalf until and unless you enter a written agreement for legal representation. Contacting the firm by phone, in person or by email does not establish or bind you to an agreement for legal representation by Huddleston Law Firm.