The Quintessential Guide to File Bad Faith Insurance Lawsuit In 2024

Knowing your options and getting ahead of the relevant statute of limitations is important to halt fraudulent insurance activities in their tracks. In the U.S., insurance companies legally have an indirect agreement of good faith and fair dealing duty to their clients. However, if the insurance company fails to deal fairly with you or act in good faith, you have grounds for a bad faith insurance lawsuit

You do not have to blindly accept the denial of insurance companies if it does not make sense to you. Nevertheless, the insurance company that acts in bad faith has to pay you even more money than it originally owned under your policy. 

Settlements in a bad faith insurance lawsuit

You don’t have to take a lowball bad faith insurance lawsuit settlement offer that fails to cover your medical bills, emotional costs, and other damages. Hiring a trustworthy lawyer will help you get the compensation you deserve. 

The settlements in bad faith insurance cases are based on the details of your case, the reputation of the insurance company, and the past bad faith infractions the company may have on the record. Nevertheless, the settlement could potentially be a lot more than what you would have been paid.

One of the foremost reasons bad faith insurance verdicts can get so high and dwarf the initial policy limit is the punitive damages allowed for by common law.

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Five signs of bad faith insurance

The insurance companies are legally allowed to deny claims. Therefore, if your claim has been denied for non-legitimate reasons, it can be a sign of an insurance bad faith company. 

For example, if the insurance company:

  • Does not give you any reason for denial. 
  • Highlights a complex section of your policy as a means to explain away a denial.

If your insurance company fails to actively investigate, they might be engaged in bad faith practices. Sometimes, the insurance companies either don’t investigate at all or perform a poor investigation. 

For example, if the insurance company:

  • Fails to conduct an assessment in a reasonable period. 
  • Continuously delays or fails to follow up with the investigation. 
  • Provides little to no scrutiny or questions about certain aspects of your bad faith insurance claim
  • Does not communicate with the relevant parties involved.

Sometimes, the insurance companies try to delay payments because unpaid money earns interest for the insurance company. Moreover, when the payment is made, the interest stops. 

For example, if the insurance company:

  • Delays payment to try to wear you down so you will accept less on your claim. 
  • Try to discomfort your bad faith insurance damages, stress, and overall compound over time. 
  • Bet on claimant desperation.
  • Offers ridiculously low settlements in the misguided hope that bills and stress have made the claimant desperate for any sum.

Most of the claimants are unfamiliar with the complex and convoluted language in their insurance policies. Consequently, they trust professionals to help them understand. 

However, when professionals try to leave you high and dry by citing obscure language within your policy as a reason for denial, it can be incredibly frustrating. 

For example, if the insurance company:

  • Twist the language to read in their favor. 
  • Misinterpret the facts.
  • Misrepresent certain aspects of the policy.
  • Use intentionally vague language. 
  • Bring up clauses completely unrelated to the claim. 
  • Points to laws that no longer apply. 
  • Makes a threatening, false statement to a policyholder.
The last tactic insurance companies might employ is requesting unnecessary, immense, and unrelated documentation from the claimants. It is done to delay your claim and confuse you in hopes of complicating the process. 

For example, if the insurance company:

  • Try to deny your requests for documentation. 
  • Refuses to provide you with all the information you are entitled to. 
  • Moreover, you have every right to obtain copies of your policy or other coverage-related documents. 

The insurance companies have an entire toolbox of tricks to make your life difficult. However, don’t forget you have legal rights too. Firstly, you need to contact a skilled and licensed attorney for a free consultation to understand the duties the insurer owes you. 
bad faith insurance lawsuit

How to know if you have a legitimate insurance bad faith claim?

Not every claim rejection rises to the level of bad faith. There are legitimate situations where the policy may simply not cover the type of damages suffered by your home. 

However, if you have doubts, you should review your insurance policy or contact a licensed attorney. Because of the extensive experience, the bad faith insurance lawyer will help you satisfy all your queries accurately. They understand your policy and provide clarification. Moreover, they will provide legal resources necessary to understand the state law and your rights under insurance contracts. 

When an insurance company denies your bad faith insurance claim, you can easily file a bad faith insurance lawsuit against them. The attorney will help you file a bad faith claim with a hassle-free procedure. 

When the insurer fails to act in good faith, it becomes important for you to prove the following:

  • The insurer withheld benefits under a policy. 
  • The withholding of benefits was unreasonable. 

Which type of companies can be sued in an insurance bad faith claim?

Any type of insurance can be sued for failure to pay an insurance claim. Here is a list of companies that can be sued in a bad faith insurance claim:

  • Homeowner’s insurance companies. 
  • Auto insurance company. 
  • Driver’s insurance company. 
  • A business insurer. 

If you want a bad faith insurance lawyer who cares about you and the outcome of your bad faith insurance lawsuit, choose Ethen Ostroff Law. He and his professional connections ensure you get every dollar possible for what you went through.

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