When you enter into a contract with an insurance company, you assume you will receive the coverage you purchased if you submit a claim. If your insurance company wrongly denies a claim, you may have a bad faith insurance case.
This blog will discuss bad faith litigation basics and how an experienced law firm can hold insurance companies accountable.
The Process of Bad Faith Litigation in Kansas City
While each state’s bad faith laws are different, an insurance company acts in bad faith when it:
- Wrongly denies a claim
- Fails to pay insurance coverage
- Wrongly refuses to provide a defense to its insured
If an insurance company acts in bad faith, the insured could receive compensation for the original claim, and, sometimes, they may be eligible for additional compensation.
Every bad faith case is unique and requires a distinct analysis based on its facts, the terms of the insurance agreement, and the law.
Step 1: Is It Bad Faith or Legitimate Claim Handling?
An experienced law firm will start the bad faith litigation process by determining if an insurance company is acting in bad faith or legitimately handling a claim.
Insurance Companies’ Good Faith Promise
Generally speaking, there is an implied covenant of good faith and fair dealing when a person enters into a contract with an insurance company. This means that the insured and the insurance company are required to act in “good faith,” upholding their side of the contract when they attempt to fulfill the terms of the agreement. From the insurance company’s perspective, that means upholding the duties they owe under the policy.
The following are the typical duties that insurers owe policyholders:
- Investigate a claim correctly
- Defend if a policyholder had liability insurance covering a potential claim
- Pay settlement costs or court-ordered damages when a policyholder’s liability insurance covers a claim
- Settle when there’s a reasonable settlement that protects the insured from any out-of-pocket losses that could come from a lawsuit
Talk to a Lawyer Knowledgeable in Bad Faith
The best way to determine if an insurance company is acting in bad faith or denying a claim for a legitimate reason is to work with a trusted bad faith lawyer.
An experienced bad faith litigation attorney will:
- Analyze each case based on its unique facts and circ*mstances
- Be able to properly interpret insurance policies.
- Have in-depth knowledge of insurance laws
Step 2: Collect Bad Faith Claim Evidence
Next, an attorney who works in bad faith litigation in Kansas City will collect evidence that helps evaluate the underlying claim.
Example: Car Accident Insurance Claim
A car accident may require an insurance company to pay for the injured party or provide a defense to the driver/insured.
If the insurance company has wrongfully failed to uphold the insurance policy by not doing one of the above, the evidence necessary involves the actual analysis performed by the insurance company, if any, in reaching its decision not to pay a claim or provide a defense.
That analysis is then judged to determine if it was reasonable under the circ*mstances of that unique case.
Step 3: Legal Consequences for Insurance Companies Acting in Bad Faith
If your attorney determines an insurance company acted in bad faith, the company may face legal consequences. The following are some of the legal repercussions an insurance company may be responsible for if it’s determined it acted in bad faith:
Insurance Companies Will Have to Fulfill Contract Terms
The insurance company will be made to uphold the insurance contract’s terms. This includes paying out on an insurance claim.
The Insurance Company May Have to Pay Extra Contractual Damages
An insurance company may be held responsible for harms beyond the insurance contract and policy.
Example: A Payment That Exceeds Your Insurance Policy
If an insurance policy provides $100,000 in coverage and the jury awards $200,000 to the insured, the insurance company may be responsible for paying $200,000 even though that is more than the policy limit. (This can also happen if the jury awarded $10,000,000 and the policy limit was only $100,000.)
The Insurance Company May be Responsible For Statutory Penalties
Statutory penalties are a set amount or calculation used for determining additional damages beyond the policy limit. These penalties are intended to deter insurance companies from acting in bad faith.
The Insurer May be Made Responsible for Harm
Being “responsible for harm” is when an insurance company is made responsible for any repercussions the insured suffers due to the provider not correctly assessing the case.
Why Insurance Companies Act in Bad Faith
Most commonly, an insurance company will commit bad faith when they make a snap, incorrect judgment, and quickly deny a claim.
Example: A Borrowed Vehicle Results in a Car Crash
A person borrows their friend’s car and causes a car accident where the victim develops paraplegia.
The insurance company immediately decides the person is not covered because they are not listed as insured on the car, meaning they don’t fit the initial definition of who has insurance under the contract.
However, upon further analysis, it’s determined the person driving the car meets the definition of an insured.
When coverage is quickly, wrongfully denied to the detriment of the person and/or the victim, that could be bad faith.
Acting Unfairly Isn’t Acting in Bad Faith
It’s common for people to assume that an insurance company acted in bad faith when they were acting unfairly.
While it may seem unfair, it’s common for insurance companies to try to lessen their responsibility and payments, even though they are under contract to make them.
The Challenges of Bad Faith Litigation in Kansas City
While proving an insurer has acted in bad faith is complex, an insured can succeed with the help of a bad faith attorney. Lawyers experienced in bad faith know to look out for the following challenges inherent in bad faith litigation.
Bad Faith Litigation Involves Two Cases
Bad faith often involves the underlying case and the case against the insurance company. Law firms experienced in bad faith litigation can handle these complex cases and are aware of the other challenging nuances inherent in bad faith litigation.
Insurance Companies Don’t Want to Pay
Insurance companies will always fight hard, especially when there is a chance they could be held responsible for a mistake or for more than they thought they had contracted through a policy limit. Legal strategy and nuance are required to litigate these claims effectively.
Other Bad Faith Litigation Questions to Consider
What actions can cause bad faith lawsuits?
Bad faith lawsuits are created for several reasons, including:
- Improper denial of coverage
- Failure to communicate relevant information
- Failure to conduct a reasonable investigation
- Refusal to pay the claim without investigating
- Failure to promptly process a claim
- Failure to promptly confirm or deny coverage
- Failure to attempt a fair and reasonable settlement
- Offering significantly less than the true value of a claim
- Failure to provide a reasonable explanation for the denial of a claim
- Failure to disclose policy limits
- Wrongfully exposing an excess insurer to liability
What is the difference between 3rd-party bad faith and 1st-party bad faith?
A first-party claim is a claim that’s filed with an insurance company in pursuit of financial benefits for losses or injuries from the injured party’s own insurance policy.
A third-party claim is a claim for injuries or losses against someone else’s insurance policy.
When do I need to file a lawsuit and/or claim?
All states have a “statute of limitations” regarding types of lawsuits. These statutes determine the amount of time a person has to file a lawsuit or the claim may be barred regardless of its merit.
Generally, these deadlines are fairly short, and depend on:
- Type of claim
- Nature and place of injury
- Parties involved
- Age of the injured party
Contact Bartimus Frickleton Robertson Rader for Your Bad Faith Litigation in Kansas City Needs
Insurance companies often work hard to deny what they owe. It is typically impossible to take on an insurance company alone.
People making a bad faith claim will greatly benefit from working with experienced, compassionate attorneys who understand bad faith law and have a successful history of taking on these cases.
If you or a loved one thinks they have a case, a bad faith litigation lawyer in Kansas City can ensure you receive fair compensation. Our lawyers have resolved thousands of cases for our clients that range from personal injury to highly complex insurance matters.
Bartimus Frickleton Robertson Rader is the trusted name for bad faith insurance attorneys in the Kansas City area. We deliver answers, accountability, and justice for victims of bad faith insurance claims.
To connect with one of our attorneys today, use our virtual case tool or contact our office at (913) 266-2300 to speak with one of our team members.
The above is not intended to be legal advice. Each individual case is different and must be analyzed on its own set of facts and circ*mstances. If you believe you may have a case, it is critically important that you timely contact a lawyer to ensure your rights are protected.
