Insurance company bad faith
Insurance is purchased for the purpose of financial protection – period. Sometimes, however, after taking in premiums an insurance company will lose sight of this fact and unreasonably deny claims made by their insureds or against their insureds just so that the insurance company can enjoy greater profits. In either case, unreasonable denials are wrong and costly for the insureds. The unreasonable denial of an insurance claim is characterized as “bad faith” and bad faith is actionable against an insurance company.
Some general examples of how an insurance company can engage in bad faith conduct include failing to protect its insured’s financial interests by:
- refusing to fairly settle a claim made against its insured
- failing to timely settle a claim made against its insured
- taking an unreasonably long time to investigate a claim
- failing to thoroughly investigate a claim prior to denying it
- unreasonably interpreting the terms in the insurance contract
A very good, concrete example of serious bad faith occurs as follows:
You have a car wreck and it is your fault. The other driver is injured. You have $25,000.00 in liability insurance coverage for the injured driver’s damages. The injured driver has $12,500.00 in medical bills related to the wreck. The injured driver offers to settle his claim against you for your insurance policy limits of $25,000.00. This offer to settle, if accepted by your insurance company, will protect your assets (your house, your car, your life’s savings, etc.) from exposure at trial. The insurance company unreasonably fails to settle the other driver’s claim within your policy limits and the driver sues you. At trial, the driver secures a $50,000.00 judgment against you. You now have $25,000.00 worth of personal exposure beyond your insurance policy limits due to your insurance company’s failure to settle the case earlier. You also have a bad faith claim against your insurance company.
This matter has been litigated extensively in the state of Georgia and some of the reported cases include:
Cotton States Mutual Insurance Company v. Brightman, 276 Ga. 683 (2003)
Kingsley v. State Farm Mutual Automobile Insurance Company, 353 F.Supp. 2nd 1242 (N.D. Ga. – 2005)
Fortner v. Grange Mutual Casualty Company, 294 Ga. App. 671 (2008)
Insurance companies do, in fact, have the right to reject insurance claims or adjust them in a manner that is disputable in terms of fairness. And it will not be considered insurance bad faith if the basis for rejection or disagreement is valid. However, many insurance companies are notorious for employing any tactic available to avoid payment of claims. They will attempt to disguise bad faith with bogus contentions of reasonableness or stonewall a claimant in an effort to outlast him/her.
It takes a trained eye to appreciate whether an insurance company is legitimately disputing a case or simply trying to save money at the expense of its insured. If you believe you have been victimized by an insurance company you should consult a lawyer promptly. The Dow Firm, P.C. is ready to assist you in this regard.
