When a contract is formed between two people or a business and a person, the expectation is that both parties will follow through on their obligations under that contract. This theory extends to all types of contracts including those that consumers have with an insurance company. When you file a legitimate claim with an insurer, you expect them to follow through on their commitment to pay claims that are covered by your policy. Problems arise when they do not.
What is Bad Faith Insurance?
When you sustain an injury or you have had damage to your home and you file a legitimate claim with your insurance company they should pay your claim in full. However, oftentimes, insurance companies find reasons to deny claims. When the claim is documented and the damage or injury is covered under your policy, the insurance company has an obligation to treat you fairly and pay the claim. When they refuse to pay or make unreasonable demands in order to pay the claim, you may be a victim of bad faith insurance. In addition, to these situations, an insurance company cannot underpay a claim, delay payment or make an unreasonable interpretation of your coverage in denying a claim. They have a further obligation to investigate the claim, particularly if they are denying that claim.
How Do You Prove Bad Faith?
Many consumers hesitate to seek assistance from an attorney because they feel that proving their insurance company acted in bad faith is too difficult. In reality, it may not be as challenging as you think. In order to sustain a claim you have to show:
- The claim is legitimate – for a home loss, estimates of damage can demonstrate the legitimacy of your claim. Medical bills are fairly easy to prove that the tests, surgical procedures or medication was necessary to your well-being.
- Coverage is sufficient – a simple review of your insurance policy will help you determine if the incident was covered. All exclusions must be reviewed to ensure that the damage or illness is not omitted from your policy.
- You have kept up payments – as a consumer, proof that your premiums are paid in full and that your coverage has not elapsed due to non-payment of a premium.
Consumers will have to provide evidence they filed a claim in a timely manner and provided the proper documents to the insurance company to document their claim. In addition, it is important to maintain a complete record of all correspondence with the insurer or agents regarding your claim.
Filing a Bad Faith Claim
Initially if your insurance company has denied your legitimate claim one of the first things you should do is appeal their ruling. Oftentimes, once the insurer has all of the information in one place and an independent party reviews the claim and associated documents, the claim will be paid. However, if they are not, you have to take two additional steps, the first, filing a complaint with the Kentucky Department of Insurance and secondarily contacting an attorney who can handle bad faith insurance lawsuits. In some cases, you may wish to contact an attorney first and they can advise you on the best way to proceed.
We expect our insurance company to treat us fairly and when they have offered far less than your claim is worth, denied your claim or have taken far longer than anticipated to settle what appears to be a simple claim, you could be facing additional financial repercussions. This is why it is so important to contact an attorney; you have rights and you need an advocate on your side to protect your rights and to ensure you get a fair payment from the insurance company.
Insurance companies have an obligation to treat their policyholders fairly. Unfortunately, they often are concerned about their bottom line and their shareholders; paying less in claims means a stronger bottom line, higher profits and therefore better payouts to shareholders. The fact is that your legitimate insurance claim should be paid in full in a timely manner and we can help ensure that happens. Whether you have a claim against your health insurance, auto insurance or homeowner’s insurance, we are here to help.