You’ve been in a car accident. Your car is totaled, you have injuries that require medical treatment, and you’ve missed time at work. To make matters worse, you’re now dealing with the insurance company, and things aren’t going smoothly.
Maybe the insurance company is denying your claim outright. Or they’ve accepted your claim but are offering an unreasonably low settlement. Perhaps they’re delaying and stalling, making the claims process drag on for months.
Whatever the case, you suspect the insurance company is not acting in good faith. If you’ve been injured in a car accident, this situation is all too common. Insurance companies are for-profit businesses, and some look for reasons to deny or minimize claims.
But here’s the good news: the law protects you in these situations. All states have laws against insurance companies acting in “bad faith” during the claims process. If an insurance company violates these laws, you can take legal action and potentially receive extra compensation.
This article will explain exactly what bad faith is, what your rights are, and how an experienced car accident lawyer can help if you find yourself in a battle with the insurance company. Read on to learn what every good lawyer for car accident cases would want you to know.
What is Insurance Bad Faith?
Bad faith refers to unfair claim practices by insurance companies. It involves denying or delaying payment of legitimate claims for unreasonable or fraudulent reasons.
Some examples of bad faith practices:
- Denying your claim by claiming you failed to meet conditions, even though you did.
- Refusing to pay for treatment even though it’s clearly covered.
- Delaying the claims process without a valid reason.
- Not attempting to settle claims promptly and fairly.
- Misrepresenting facts to make your claim look fraudulent.
Essentially, bad faith is when an insurance company puts its own financial interests ahead of your right to fair compensation. This can take many forms, from subtle stonewalling to outright lies and deception.
Acting in bad faith violates state laws, meaning you can take the insurance company to court over it. But most people don’t realize these consumer protections exist. The company may pressure you to accept an unfair settlement, counting on the fact that you don’t know your legal rights.
This is where an experienced car accident attorney can make all the difference…
How Can a Lawyer Help With Insurance Bad Faith?
Dealing with insurance bad faith can seem like an uphill battle. The company has teams of lawyers on its side. You’re still recovering from your accident and injuries. Navigating the claims process is confusing and stressful.
Husain Law + Associates — Houston Accident & Injury Lawyers, P.C. level the playing field by bringing legal expertise and advocacy to your case. Good lawyers can:
- Review your policy: The lawyer will examine your insurance policy to ensure the company is applying terms and conditions correctly. Breaching the policy is bad faith.
- Gather evidence: Unlike you, lawyers have investigative resources to build a solid case. They can collect police reports, medical records, financial documents, and other evidence.
- Prove unreasonable delays/denials: Experienced lawyers know how to prove when an insurance company is dragging its feet or denying a valid claim without cause.
- Negotiate aggressively: Insurance providers know they can’t easily trip up or pressure an attorney during settlement talks. Lawyers negotiate firmly for maximum compensation.
- Take legal action: If talks fail, a lawyer can file a bad faith lawsuit against the company. This threat often motivates fair settlements.
- Recover extra damages: Insurers found guilty of bad faith must pay your original claim amount plus additional compensation for stress, economic loss, and attorney fees.
While you focus on recovering physically and mentally from the accident, a lawyer does the legwork to build leverage against the insurance company. This prevents them from taking advantage of your vulnerable position.
Common Examples of Car Insurance Bad Faith
Now that you understand the basic concept of insurance bad faith, let’s look at some real-world examples…
Denying a Claim With No Valid Reason
After an accident, the other driver’s insurance company denies responsibility. They say you caused the crash and they won’t pay your claim.
However, the police report states the other driver was clearly at fault. You have dashcam video proving you did nothing wrong. Yet the insurer sticks by the denial.
This unreasonable refusal, contradicting clear evidence of fault, qualifies as bad faith. A lawyer can force the company to justify the denial or reverse it.
Offering an Unreasonably Low Settlement
The insurance company agrees you’re entitled to compensation. But they offer a settlement that is nowhere near the typical car accident settlement amounts.
For instance, your car is totaled and medical bills are $8,000. But they want to pay only $3,000 to settle the claim. Such a lowball offer constitutes bad faith if your claim is well-documented.
A car accident attorney can demand they raise the offer significantly or take them to court.
Delaying the Claims Process Excessively
Insurers are expected to handle claims promptly. But yours seems to drag on and on.
The company keeps asking for more documents and then goes silent for weeks. Calls and emails to your claims adjuster go unreturned. Simple processes like arranging a medical exam take months.
If there’s no reasonable basis for these delays, they likely signify bad faith. An attorney can force the company to explain the delays in writing. Often this generates a fair settlement offer.
Misrepresenting Facts About Your Claim
Say the insurance provider alleges you were speeding at the time of the accident. However, the police report states clearly you were not.
By misstating facts like this to undermine your claim, the company is showing bad faith. Experienced lawyers know how to confront them with evidence exposing such misrepresentations.
Ignoring Clear Evidence in Your Favor
You provide the insurer with evidence proving your claim is valid. This includes police reports, witness statements, medical records, and more.
But the company ignores it all and continues to deny or dispute your right to fair compensation. Intentionally disregarding evidence favorable to you is bad faith behavior.
With legal representation, you can compel the insurer to consider this evidence properly when re-evaluating your claim.
Denying Treatment Coverage That is Clearly Valid
After the accident, the insurance company pays for certain treatments covered under your policy’s injury protection benefits. Later, they deny coverage for additional therapy your doctor says is medically necessary.
They claim it’s “not accident-related” even though your physician provided documentation that it clearly is. This arbitrary denial of coverage you’re entitled to is potential bad faith.
Your lawyer can present medical evidence and demand the insurer reverse this denial immediately.
Threatening Legal Action to Force a Settlement
Finally, you and the claims adjuster reach an acceptable settlement agreement during negotiations. But then the company suddenly backtracks and lowers the offer.
They say if you don’t accept the reduced amount, their legal team will tie up your claim in court for years. This hardball tactic drags out the process and pressures you to settle for less.
Letting your lawyer handle talks prevents this type of legal threat and intimidation. Insurers know such behavior won’t fly with experienced attorneys ready to call their bluff.
Proving Bad Faith: Documents and Evidence
These examples show why legal representation is so important if you suspect bad faith. Insurance companies have an arsenal of tactics to deny, delay, and minimize claims.
Fighting back requires concrete proof of their misconduct. Skilled car accident lawyers know how to methodically build a compelling case by collecting documentation such as:
- Claims correspondence: Letters, emails, and call/meeting notes that demonstrate stalling, unreasonable denials, and attempts to mislead.
- Police report: Reports that contradict the insurer’s version of events or support your claim.
- Medical records: Documents that validate the severity of your injuries and the necessity of treatments.
- Expert opinions: Assessments from medical, accident reconstruction, or financial experts verifying your losses and damages.
- Company claim guidelines: Internal materials showing the insurer violated its own standards or state claim settlement laws.
- Claims handling history: Documentation revealing patterns of bad faith practices by the company and its adjusters.
- Recorded statements: Transcripts of recorded calls demonstrating misleading or threatening statements by company representatives.
- Financial records: Pay stubs, tax returns, and other records validating lost income and other economic harm caused by the accident.
Skilled bad-faith attorneys know how to uncover these documents through demands to the insurance company, subpoenas, depositions, and investigations.
The right evidence gathering can build an ironclad legal case against insurers who attempt to skirt their duty to process claims fairly.
Why Insurers Commit Bad Faith: Money
In the end, the root motive for bad faith is insurers putting profits over your right to fair claim payment. Some examples:
- Paying fewer claims – By wrongfully denying claims, fewer policyholders get paid. This boosts the company’s cash flow.
- Paying smaller settlements – Dragging out claims pressures injured people to accept unfairly small settlements. This cuts claim payouts.
- Earning more from investments – Delaying payments allows insurance firms to earn interest on unpaid money as it sits in their investment accounts.
- Reducing expenses – Cutting corners on claim investigation saves adjusters’ time and insurer resources. But it leads to improper denials.
- Increasing profit margins – Stockholders benefit when companies keep claim payout ratios low. Bad faith practices artificially suppress payouts.
- Lowering loss ratios – Insurer profitability metrics improve when the ratio of claim payments to premium dollars collected goes down.
Make no mistake, insurance providers are incentivized to minimize claim spending by any means necessary. For some firms, bad faith is an unwritten business strategy. Only hiring a skilled attorney and instituting legal action can stop such unethical practices.
Beware of Common Insurance Company Tactics
Once you submit a claim after an accident, be alert for red flags that may indicate impending bad faith. Watch for these telltale industry tactics:
Delay responding – The adjuster goes silent after your initial claim notification, stalling the process.
Lose paperwork – Important claim documents you submit conveniently go missing. You’re asked to resend.
Question treatment – Insurer disputes whether prescribed treatments are truly accident-related.
Require multiple exams – Doctor exams by firm-chosen specialists continue repeatedly.
Misquote policy terms – The adjuster deceives you about exclusions, requirements, and policy limits.
Make low offers quickly – A lowball settlement offer comes after minimal review, trying to “cash you out” fast.
Refuse to negotiate – The insurer won’t rationally negotiate or justify its low offer amounts.
Deny without explanation???- Claim denied without clear basis, or blamed on excluded driver, modifications, or other false grounds.
Threaten litigation – The company says it will tie up your claim in court for years if you don’t accept its offer.
Hire investigators – The adjuster suddenly claims routine investigation is still needed after months of delays.
If you notice such tactics, caution is required. The company may be angling to exploit your lack of legal expertise and financial desperation. Fight back with experienced counsel.
Your Bad Faith Lawsuit Options
If confronting the insurer doesn’t resolve your claim fairly, suing for bad faith is the next step. Depending on your state’s laws, legal options include:
Breach of contract claim – Sue the company for breaching your policy contract by failing to pay covered benefits.
Unfair claims practices lawsuit – Sue the insurer for violating your state’s unfair claim practices statutes. Companies found liable must pay your damages plus penalties.
Extracontractual liability lawsuit – Seek compensation above policy limits, such as for emotional distress from dealing with bad faith tactics.
Punitive damages lawsuit – Seek punitive damages against the company as punishment for intentionally harming you through bad faith.
Independent cause of action – In some states, bad faith itself qualifies as a stand-alone cause of action regardless of any contract breach.
An experienced bad-faith attorney can advise which claims to pursue based on the laws in your jurisdiction and the facts of your case.
The threat of legal and financial consequences often motivates dishonest insurers to make fair settlements before a lawsuit is even filed. If legal action proceeds, each claim type allows for different additional compensation.
You Can Collect Damages Beyond Your Policy Limits
Unlike a standard insurance dispute, bad faith cases allow for the collection of damages above and beyond your policy’s liability limits or benefit caps.
Depending on your specific bad faith lawsuit claims, potential extra damages can include:
- Emotional distress
- Lost income
- Medical expenses
- Lowered credit score
- Loss of business opportunities
- Legal fees and costs
- Punitive damages meant to punish insurer misconduct
These amounts can significantly exceed your policy’s limits for accident-related compensation. For example, even if your accident policy limit is $50,000, a bad faith award could reach hundreds of thousands.
In especially egregious cases, punitive damages alone can be millions against large insurers. This legal leverage motivates them to settle valid claims fairly.
How Much Time Do You Have to Sue for Bad Faith?
Bad faith lawsuits are subject to strict statutes of limitation – legal deadlines to take action. Depending on your state’s laws, you generally have 12 to 36 months from the initial claims denial to pursue bad faith litigation.
This relatively short timeframe is another reason to consult an attorney early if bad faith appears likely. You need to understand your rights and options long before the limitation period expires. An experienced lawyer can advise you of exact deadlines.
The clock starts running as soon as the insurer engages in misconduct by denying or stonewalling your claim. Don’t wait months or years hoping the company will change its position. Move promptly to explore your bad-faith legal options.
Bad Faith Insurance Practices Are Illegal
Going up against an insurance giant with deep pockets and savage legal firepower can seem daunting. But the law stands firmly on your side.
Insurers have a legal duty to handle claims honestly, promptly, and in good faith. When they cross the line into deception and misconduct, you have power under state statutes to demand accountability.
Knowledge and preparation are your allies. Understand your rights, gather solid evidence of mistreatment, and work with an attorney experienced at forcing insurers to do the right thing.
Justice comes to those willing to fight for it. With determination and skillful legal advocacy, you can defeat insurance bad faith.
Let a Qualified Lawyer Handle Your Bad Faith Battle
If you believe an insurance provider is treating you unfairly, the worst decision is hoping the problem resolves itself. You need proactive legal representation. With an assertive and strategic attorney on your side, companies realize they can’t take advantage of your lack of expertise.
