How to Prove Bad Faith Insurance

Dec 2, 2021

Bad faith insurance isn’t always clear, especially if you aren’t in the insurance industry, and there are gray areas that can be difficult to navigate. It is in insurance companies’ best interest to pay as little compensation to their policyholders as possible. That’s why you must consult a bad faith insurance attorney if you believe your insurance company has acted in bad faith. 

Insurance companies often intentionally obfuscate the truth about their policies with complex explanations and rigorous paperwork requirements that can quickly tire you out and prevent you from receiving your due compensation. In this article, we discuss what you should look for throughout the insurance claim process to avoid subjecting yourself to bad faith practices as well as how you can use a bad faith insurance attorney to prove your insurance company acted in bad faith while responding to your claim. 

The Paul Wilkinson Law Firm is here to support you for all of your bad faith insurance claim needs. If you feel like an insurance company has taken advantage of you or failed to hold up their end of the bargain, you can schedule a free consultation with one of our experienced lawyers to get the compensation you deserve. 

What Is Bad Faith Insurance?

Paying for an insurance policy implies the insurance company has a duty to uphold in exchange for your payment. If they fail to uphold their end of the bargain, they’re acting in bad faith. If we lived in a perfect world, all insurance companies would understand the oath they accept when they accept your payments. 

Unfortunately, we don’t live in a perfect world and insurance companies can be dishonest and lack integrity. This lack of integrity sometimes results in their failure to fulfill contractual obligations to the insured. When this occurs, personal injury law firms refer to this as bad faith insurance. If you can prove in court that an insurance company failed to fulfill its contractual obligation, you might be able to file a bad faith insurance claim and receive compensation. 

How Does Bad Faith Law Work?

Bad faith law balances competing interests. Insurance companies have the right to deny invalid claims and insurance policyholders have the right to receive fair payment for legitimate claims according to your policy’s parameters. 

Bad faith law works to uphold this balance and can be somewhat complex. Because bad faith insurance laws are nuanced, they require legal professionals to unpack them to determine if you have an eligible bad faith insurance claim. 

The Top Four Signs of a Bad Faith Insurer 

Determining whether your insurance company acted in bad faith can be tricky. However, the following four scenarios are the most common examples of bad faith when attorneys look to prove bad faith insurance claims. 

1. Refusal of Payment Without Providing Valid Reasoning

One of the most common bad faith examples involves an insurance company rejecting your claim without a reasonable basis. These situations can be less conspicuous than one would anticipate. Insurance companies are more shrewd than to be blatant about committing bad faith acts. 

In these cases, insurance companies will likely cite a complex portion of the contract to avoid payment. They can often cite multi-page explanations in your contract to try to shirk their financial responsibilities. If you do not understand the explanation your insurance company provides, you should visit with a bad faith insurance lawyer. They will be able to walk you through the claims process to ensure you completely understand your claim. 

2. Failure to Provide a Timely Investigation

Insurance companies have a duty to investigate your claim in a timely manner. If they fail to do so, they are subject to legal action. Insurance companies can drag their feet, refuse to pay or take too long to act, all of which constitute signs of a bad faith insurer. 

Whether you’re involved in a car accident and deciding whether to hire a car accident lawyer or your house burned down and you’re unsure of your compensation, you’re entitled to a timely investigation. If your insurance company delays and you lose access to critical pieces of information, you have a bad faith insurance claim. Having a claim also hinges on your providing all of the necessary information to your insurer. If they fail to adequately respond, it can serve as the foundation for a bad faith insurance lawsuit. 

3. The Insurance Company Settles for Less Than You Deserve

Settling for less than you deserve is a common tactic insurance companies employ when dealing with claims. It’s important for you to remember that insurance companies are for-profit organizations and it behooves them to pay as little to the policyholder as possible while fulfilling their legal obligations. Some insurance companies get carried away with this tactic and don’t fulfill their legal responsibilities to their policyholder.  

4. The Insurance Company Demands Excessive Amounts of Paperwork

Insurance companies may demand excessive amounts of paperwork when they think homeowners are too naive to investigate the claim. This tactic operates on the assumption that policyholders accept excessive paperwork as part of the claim process. They can also use this tactic as a method to extend the claims process. 

If you find yourself wondering why your insurance company needs so much paperwork, it might be time to consult a bad faith insurance lawyer. They might request paperwork never mentioned in your policy or require you to submit a preliminary claim report and a formal proof of loss form. These forms can appear under the guise of normalcy for insurance claims. However, they are often a delay tactic and you should consult an attorney to determine whether such paperwork requirements are necessary for your claim. 

Why File a Bad Faith Insurance Claim?

America’s legal system includes numerous laws designed to hold insurance companies accountable to their policyholders and the promises they’ve made via contracts. These laws were designed to protect American policyholders and you should exercise this right should you suspect your insurance company of bad faith practices. 

If you have a bad faith insurance claim, your provider might be obligated to pay far more in damages than what’s listed on your insurance claim. 

They may be liable to pay the following penalties: 

  • Statutory penalties 
  • Statutory interest
  • Liability for judgments in excess of policy limits 
  • Attorney fees 
  • Emotional distress 
  • Economic loss
  • Punitive damages 

Regardless of the unique nature of your case, one thing remains constant in bad faith insurance claims: the more negligent and egregious the actions of your insurance company, the more penalties your insurance company will have to pay. 

What Do You Need to Prove With a Bad Faith Insurance Claim?

Requirements for proving bad faith insurance claims vary by state but there are some commonalities among them you should be aware of. Most bad faith insurance definitions follow California’s because California was the first state to recognize bad faith tort law. 

In these states, you must show insurers clearly breached their contractual duty to the policyholder. Jurisdictions can also add subjective clauses to the definition stating that plaintiffs must show the absence of a reasonable basis for denying benefits of the policy to the defendant. 

All of this essentially means you must prove that an insurance company refused to pay your claim without providing a legitimate reason.

Not All Claim Denials Are Bad Faith

Because it’s on the plaintiff to prove the insurance company acted in bad faith, you should consult an attorney before submitting a bad faith insurance claim. Bad faith insurance attorneys should also offer a free consultation to discuss your case and whether you have a legitimate claim. 

Just because an insurance company rejects your claim does not mean they are acting in bad faith. Insurance policies are complex and determining whether your insurance company acted in bad faith comes down to various factors that personal injury attorneys have experience navigating.  

Conclusion – How to Prove Bad Faith Insurance

Proving bad faith insurance can be tricky given that insurance companies are skilled negotiators with ample legal resources at their disposal. That’s why contacting bad faith insurance attorneys can help you decide whether you have a claim and what course of action you should take to ensure you receive compensation. 

The bad faith insurance attorneys at The Paul Wilkinson Law Firm have over two decades of experience ensuring our clients get the most out of their cases. Additionally, we operate on a contingency fee basis, which stipulates that we only get paid if you win your case. 

Contact us today to determine what your bad faith insurance claim is worth and whether the best course of action is to take it to court. You shouldn’t have to feel like someone’s pulling the wool over your eyes and our skilled attorneys can protect you from any dodgy, unfair practices insurance companies commit. 

Personal Injury Lawyer at The Paul Wilkinson Law Firm | Website | + posts

The Paul Wilkinson Law Firm in Denver, CO has been fighting for justice for personal injury and accident victims for over 12 years. We have recovered tens of millions of dollars in personal injury settlements and verdicts and have helped thousands of people get back on their feet after experiencing serious injuries.

Each of the attorneys at the Paul Wilkinson Law Firm specializes in personal injury accidents. All of our attorneys offer a hands-on approach to their cases and will aggressively fight in our quest for compensation. Whether you've been injured in a car, truck, motorcycle, or pedestrian accident, we can help, and we're ready to take your case to trial. Feel confident that you are in the right hands with the Paul Wilkinson Law Firm.

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