Ever experienced a situation where you or someone you know had to fight with your insurance company in order to receive the benefits owed after a car accident or medical claim? If so, you may have fallen prey to insurance bad faith.
If you think your insurance company may be acting in bad faith, it's important to really understand the scope of the issue. This will help you to understand what rights you have and what may be done to resolve it.
What Is Bad Faith?
Insurance companies, in most jurisdictions in the United States, are considered to have a duty and an obligation to "act in good faith" - to provide the terms and services agreed to by those they insure. You may see this obligation referred to as "the implied covenant of good faith and fair dealing" in documentation.
The core question of any bad faith case is whether or not the insured had a reasonable basis for its decision to deny or limit benefits. If an insurance company does not hold up its end of the bargain and acts unreasonably, the insured policyholder may bring legal action against the insurance company on a tort claim, in addition to the standard breach of contract claim. The most common forms of insurance bad faith we see include but are not limited to:
- Denying the insured individual, family, or company the benefits they are owed as outlined in their policy
- Offering less compensation than what is due according to the policy (this is especially common in cases that involve car accidents)
- The unreasonable delay of payment to the insured
Protections and legal actions that may be taken against insurance companies in the case of bad faith are varied, depending on your region and which state you live in. South Carolina's state government has helpfully provided access to their code of laws surrounding insurance to the public, giving everyday citizens the ability to have those on-hand in case they run into difficulty getting the payment they are owed by their insurance company.
How Can I Protect Myself?
The first thing we suggest is to make sure you have every piece of documentation together, organized, and ready for review. It's important to maintain a copy of your insurance policy and any updates that have been made to said policy in a safe place alongside other important documents. In the case of accident, illness, injury, or property loss ensure that you maintain copies of every single related document. Not just bills, but communication with the mechanic in case of a car accident, dates and times of any interaction with your insurance or claims agent, a synopsis of what was said in each of those conversations, and be sure you write down exact numbers if dollar amounts are given at any time. In some cases, the fact that the policyholder is clearly paying attention, writing things down, and pushing for consistency in numbers and dollar amounts will persuade the insurance company to pay out the amount to avoid any further complication.
Unfortunately, sometimes even the most dedicated policyholder advocating for their own rights will still have to face an insurance company determined not to pay the amount they are contractually obligated to pay. In that case, it's imperative that you speak with a legal professional as soon as possible. A lawyer familiar with the issues surrounding insurance contracts may be able to persuade the insurance company to settle for the amount owed to you or even take them to trial, if necessary.
What Happens If it Goes to Trial?
There are a few different possibilities here. Jurisdictions and even individual cases can vary quite a bit when it comes to cases of insurance bad faith. Most commonly received are what is called "compensatory damages" — an amount of money designed to ensure you are in the same financial position you would have been in had the insurance company originally paid as it should have. In some cases, the policyholder may be awarded an extra amount intended to cover the costs of the insured retaining legal counsel and an attorney for the trial.
While big awards for punitive damages often make the news, they are exceedingly rare events, especially in the state of South Carolina. In some cases, punitive damages may be awarded in order to create something of an example of the insurance company in question, and to act as a form of punishment. In some areas, the amount of punitive damages allowed may be limited, but in other areas damages may be in the millions of dollars. In order to recover punitive damages, the insured must show that the insurance company's actions were "willful or in reckless disregard of the insured's rights."
I Think I Need to Speak With Someone.
Bluestein Attorneys is ready to answer your call and questions. Give us a call at (803) 779-7599 or click the banner below to schedule your free consultation. You'll speak with a representative of our firm, and we'll be happy to sit down with you and go over your unique situation and help you decide what steps you'll need to take next. Whether your case involves an automobile accident, motorcycle accident, or property damage claim, or any other situation in which your insurance company may be acting in bad faith — we're here to help.