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Insurance Companies Denying Benefits in Bad Faith

Mazzeo Law, LLC

After you suffer from an unfortunate accident, there are instances when your own insurance company will have to pay you for the damages you sustained such as in a hit-and-run or when the adverse vehicle had no insurance or didn’t carry enough insurance.   This will be referred to as a first party claim.  What do you do if your own underinsured carrier undervalues your claim or simply denies your claim outright?  

What should I do in case of denial?

If your insurance company either denies your claim or denies you the full value for your claim, you have the right to take legal action against your insurance company for breach of contract.  Remember, your insurance policy is a contractual commitment between you and the insurance carrier.  When you consult with a reputable attorney, such as at our office, we will assist you in processing your claim and ensuring the carrier is compelled to compensate you for the full value of your claim.  

Why do insurance companies deny a claim?

There could be several reasons why an insurance company might deny or undervalue a first party claim, including the following: 

  • They may need additional information to process your claim. 
  • The carrier may dispute whether the injuries were from the subject collision or preexisting.  If your condition preexisted the collision, the value of your damages will be adjusted accordingly based on your accident related injuries.   
  • The carrier may claim you are not covered by the policy for this accident. 
  • The policy wasn’t active and in effect when the accident occurred. 
  • The carrier may claim you failed to report the accident to them within a “reasonable” time after the collision. 
  • The insurance company may simply be engaging in dilatory tactics to delay the processing of your claim.

What conduct rises to a claim for bad faith against your carrier?

Generally speaking, insurance companies have a duty to 1) conduct a prompt, reasonable and diligent investigation of the claim; 2) it has to evaluate the claim fairly; 3) it has to effectuate a prompt fair and equitable settlement of claim; 4) it has to make any reasonable settlement offers to settle the claim; 5) it has to accept reasonable and fair offers of settlement; 6) it has to avoid unnecessary litigation for its insured; and 7) it has to pay any reasonable portion of the insurance coverage to plaintiff.

When the insurance carrier breaches it duty with respect to any of the items #1-7 above, then it’s conduct may be considered to rise to the level of acting in “bad faith” giving rise to a legal claim against it for “Unfair Claims Practices”. 

How does an insured prove that ‘bad faith’ has occurred?

Generally, in order to prove that ‘bad faith’ occurred, the attorney will track all communications between the insured and the insurer from when the claim was initially made. Typically, the attorney representing the insured will send the initial letter of representation which states that a first party claim is being made on behalf of the client/insured.  After that, we have to evaluate all the responses by the insurer (insurance company) in responding to the insured’s demand to settle to determine whether the insurer is promptly investigating the claim, is evaluating the claim fairly, and is accepting and/or making any fair and reasonable settlement offers based on the totality of the evidence which includes the insured’s medical records which document all the medical injuries sustained by the insured.    

Takeaways

Typically, insurance companies will generally not place a fair and reasonable value on claims which are made by insured’s who are unrepresented by counsel.  The carrier’s playbook is to delay, stall and undervalue claims which are made by unrepresented insured’s because the carrier knows they can take advantage of insured’s who are not represented by an attorney.  It is highly recommended that you retain an experienced and qualified attorney to handle your first party claim to ensure that you obtain the maximum fair and reasonable compensation for your damages.  

Call Mazzeo Law now to find out more (702) 382-3636