Having insurance provides policy holders with protection when faced with disaster. When you purchase an insurance policy, you’re purchasing your peace of mind. It’s good to know that you have an insurance policy you can rely on.
For that reason, it can therefore be devastating when your insurance provider denies your claim for reasons that are unjust or unclear. However, you don’t have to accept this. If your insurer denies your claim or unreasonably delays paying your claim, you may be eligible to file a bad faith insurance claim. If you want to pursue this option, consider the following steps:
- Review your contract: The first step is to understand the insurance contract/policy. Ensure that your claim is covered under the policy.
- Keep a log of your claim: It is important to have documented evidence of the claim you have filed. Gather any documents related to your claim including receipts, reports, estimates, correspondence with the insurance provider, photos and the denial of your claim.
- Give your insurer one last chance: You can do this by making a final demand for your insurance provider to pay the claim. This demand should be given in writing. It should provide a detailed account of your claim and your intent to pursue legal action if the insurance company does not pay the claim. You should also state the time within which you expect the insurance provider to respond. (This is usually within 15 to 60 days from receiving the demand from you).
- File your complaint: You can file a bad faith insurance claim when the insurance provider refuses to pay the claim within the stated period. You can file a complaint with the Department of Insurance in your state. The state insurance department is responsible for regulating insurance companies and their handling of claims. The actual services provided by the department may vary from one state to the next. However, most state insurance departments offer assistance to help settle disputes by providing mediation services.
- File a bad faith lawsuit: If mediation doesn’t work, you can consider filing a bad faith lawsuit against your insurance provider. This can be done either in federal or state court depending on jurisdiction, but in most cases it is filed in state court.
The bad faith lawsuit must be filed in a forum that is considered to have jurisdiction over the insurance company. It is also important to consider additional claims when filing your lawsuit. These may include breach of contract, negligence and fraud. This will help to maximize the recovery of damages from the insurance provider. You can still continue to pursue your bad faith lawsuit even if the insurance provider decides to settle the claim.
Bad faith lawsuits can result in a substantial damage awards – in some cases, substantially more than the insurance policy limits. However, they are extremely complex and you should only pursue such claims with an experienced lawyer when you have clear facts demonstrating the insurer’s bad faith.
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