Most of us purchase insurance for peace of mind. Insurance safeguards us against the devastating economic losses that come from personal injuries, medical bills, property damages, or the possibility of lawsuits that follow injuries and damages. You pay the premiums and in return the insurance company must assist you in getting the coverage available under your policy.
Insurer’s Duties and Responsibilities
In order to keep up their end of the deal, an insurer’s obligations include: provide coverage, uphold the terms of the policy, conduct thorough and unbiased investigations, defend the insured in lawsuits, and pay any valid claims that are covered by the policy. All insurance companies are obligated to operate in good faith – or fair dealing. This means that they are to treat their policyholder’s rights just as importantly as their own.
What if They Drop the Ball?
Unfortunately, good faith or fair dealing doesn’t always occur. Sometimes in an effort to protect their profits, insurers don’t make good on their promise and they commit breaches through deceptive practices like:
- Deliberately misinterpreting their own policy language to avoid paying a claim
- Ignoring relevant evidence submitted by the insured
- Exercising unreasonable delays to avoid resolution to a claim
- Making arbitrary demands regarding proof of loss
- Using abusive tactics
- Asking an insured to unnecessarily contribute to a settlement
- Failing to conduct a thorough investigation
More examples of bad faith can be found in the NAIC’s Model Unfair Settlement Practices Act, which provides standards that insurers should follow. These breaches may bring about a bad faith lawsuit.
What To Do If You Find Yourself in a Conflict With Your Insurer?
If an insurer has acted in bad faith, you do not have to accept their actions. Instead, you may be able to bring a lawsuit to hold them accountable*. There are some important steps to take prior to initiating a bad faith lawsuit. Here’s where to start:
Review the Contract
Since an insurance policy is a contract between you and the insurer, it is important to be clear on whether there has been a violation of the contract. Start by obtaining a copy of the full version of your contract and review it carefully.
Diligently gather, record, and log
Gather up all the documents and evidence that proves the validity of your original claim. This substantiates that your claim falls within the terms of your policy. Include photos, reports, estimates, receipts, emails, and all your correspondence with your insurer. Keep track of the dates of your calls, who you talked to and what was discussed.
Record the denial of your claim
If your claim is denied, have a supervisor at the insurance company review the claim and denial. There may be a possible reconsideration from them on their denial of coverage. Document all the interactions and the insurance company’s statements you receive.
Contact the Department of Insurance
You might also consider filing with the department of insurance. Alabama’s department of insurance can be contacted through www.Aldoi.gov. Sometimes, this action can be helpful and at the very least provides a record of the insurance company’s contact with the department of insurance, which is responsible for regulating insurance companies in the state.
Launching a Bad Faith Lawsuit
There are many elements to consider when filing, and quite a few decisions to be made. Your complaint may include additional claims such as fraud and breach of contract. If you have a bad faith claim you will be able to recover the amount owed under the policy, interest, costs of the litigation (but not attorney’s fees), and possibly mental anguish damages and punitive damages.
Filing a bad faith lawsuit against an insurance company is not a simple task. An experienced bad faith insurance attorney can help clarify your rights and guide you through the process. If you feel your insurer has acted in bad faith, contact Johnstone Carroll today to make sure your rights and interests are protected. At Johnstone Carroll, our attorneys have extensive experience with bad faith claims and will help you get the protection you deserve.
FREE Consultation with an Attorney
We offer you a free consultation to review your insurance contract and any supporting documentation. We will advise you based on your specific situation. Call us directly at 205-383-1809 or fill out our online contact form.
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*This discussion is based on Alabama law. Many other states allow their residents to sue insurers for bad faith or similar claims, but not all do.