Sun. Jun 7th, 2020

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What To Do if You Are a Victim of a Bad Faith Claim

You’ve been paying on your insurance policy for years and never had to make a claim. You thought you were receiving excellent service since you paid bills on time, assumed your coverage was good, and always received excellent customer service. Now, though, things have changed. If you’ve filed a claim with your insurance company only to be told they wouldn’t pay for it, or worse, been met with radio silence instead of a fast resolution, you could be the victim of a bad faiths claim.

Bad Faith vs. Making a Mistake

Before you start looking for a bad faith claims expert Houston TX, understand that not all breakdowns in communication or refusals to pay are actually a bad faith situation. If you and your claims adjuster disagree on something, it isn’t bad faith, unless he or she refuses to show you support for their findings. Remember, too, that mistakes happen. A silent insurance company that apologizes and makes things right when you do get in touch with them likely just made a mistake, although a court may stay consider it problematic. Bad faith occurs when it becomes obvious that the agency is purposely seeking out evidence only to support its refusal to pay or neglects to give an explanation or evidence at all.

Two Types of Bad Faith Claims

Bad faith can be common law or statutory. Common law situations indicate the insurer owes an act of good faith to the policyholder. First, though, the policyholder must prove bad faith by showing owed benefits were withheld and that the explanation given was unreasonable. A statutory claim occurs when the insurer violates a state law enacted to protect policyholders from deception. One lawsuit can allege both types of bad faith situations. 

Fighting a Bad Faith Claim

If you suspect bad faith, you must document your claim denial, including all interactions you have with the insurer about the denial. You must send a final written demand letter and obtain a return receipt to prove you mailed it. Indicate that you intend to pursue a bad faith claim if you do not hear from the insurer within the specified number of days according to state law. If the time passes without payment, contact your state’s Department of Insurance. Mediation often occurs; if it doesn’t lead to resolution, you can file a bad faith lawsuit. If you do so, seek compensation not only for the policy but any punitive damages and legal fees you accrued during the process.

If you do decide to continue with your bad faith lawsuit, it is important to work with a reputable attorney who is knowledgeable in insurance law. Seek someone who is licensed and ensured, has a proven history of winning cases, and communicates well from the first consultation.