Dealing with an insurance company after a car accident can be a real pain. Having to talk to an investigator (after you've already spoken with the police), wait months for a determination, and potentially get denied coverage anyway isn't a very pleasant experience.
However, in some cases, an insurance company engages in "bad faith" when handling a claim. This is a contract law term that essentially means they're acting dishonestly when denying a claim. Let's take a closer look at what bad faith claims are and what steps you can take if you feel your car accident claim has been handled in bad faith by your insurance.
What Bad Faith Is and Isn't
The term "bad faith" is used rather loosely in many contexts, but when talking about insurance, it has a very specific usage. It means that your insurance company either handled your case negligently, failed to uphold their end of the terms of your policy, or in another way purposely went out of its way to deny a valid claim unjustly.
A low settlement offer, a math error in their calculations, or an insurance adjuster acting like a jerk doesn't qualify as "bad faith". However, if they deny your claim without sending an adjuster, the adjuster only speaks to the other party and not you, or they offer you a very small amount of money with no explanation and pressure you into taking it, that could be considered "bad faith".
When and Why Do Bad Faith Claims Happen?
Bad faith claims happen when a person whose insurance company handled their case in bad faith by unjustly denying their claim decides that they aren't going to accept this mistreatment and takes steps to get the money they're rightfully owed.
Although car insurance laws are different depending on which state you live in, Bad Faith Claims usually follow a specific formula. However, you should check the requirements for your state (either by checking the relevant regulations or by speaking with an attorney) to see if you have a case.
These claims can be difficult to prove in court, especially in states where you have to prove that they purposely tried to deny you coverage out of greed or malice. However, there are other steps you can take before you set foot in a courtroom.
Writing a "Bad Faith" Letter to Your Insurance Company
The first thing to do is to write a letter to the insurance company's legal department that explains who you are, the details of your case, and why you believe they engaged in malpractice while handling your claim. Templates for these letters can easily be found online, but you may want to consult a lawyer to help you fill one out.
In some cases, especially those for smaller dollar amounts, the company will offer you a higher settlement, often the amount you wanted in the first place, simply because it saves them from having to go to court. Given the choice between paying the $5,000 a customer is seeking or spending six months at trial where they might have to pay anyway, they'll usually take the first option.
What Kind of Damages Do Successful Bad Faith Claims Usually Get?
One major reason that insurance companies would rather settle instead of going to court is that Bad Faith Claims can cost them a lot of money.
In addition to paying the amount of money they would have owed if they handled the case in good faith, they might also have to pay interest on that sum, the plaintiff's attorney's fees, and even punitive damages designed to discourage them from engaging in this type of behavior in the future.
How an Attorney Can Help
If you've been in a car accident and feel that your insurance company handled your case in bad faith, you may want to speak to an attorney who specializes in dealing with insurance-related cases. They'll be familiar with previous similar cases and relevant state laws, so they'll be able to recommend what your next steps should be.
It's important to get an attorney who is licensed to practice in your state and make sure all information you look up on your own is relevant in your state as well. Bad faith claims have different requirements even in neighboring states, which means advice you read online from California, for example, might be completely different from advice you'd receive in New York or another state.
