Contrary to what commercials say, insurance companies are motivated by profit. This can lead to unfair treatment of the policyholder. Bad faith laws vary by state (in Texas, for example, policyholders are protected by the Unfair Claim Settlement Practices Act), but they all have the same goal of ensuring a fair relationship between policyholders and insurers. It may be difficult to know when to file a claim, but you can start with these three questions to help guide your decision.
Do I Have a Good Reason?
That may seem like an obvious question, but claims are rejected for many reasons. Before picking up the phone to call a bad faith claims expert Houston TX or wherever is closest, you may want to double check with this list.
- Did they honor the terms of the policy?
- Did they give a clear reason for the denial?
- Was their investigation of your claim timely?
- Was the amount they offered low by a significant amount?
- Did they provide the necessary documentation?
What Damages Can I Recover?
Damages available in a bad faith claim vary by state, but in general, you can expect similar outcomes across the country. The primary damage a policyholder can expect to win from a bad faith claim is the amount the insurer should have paid plus attorney fees and related court costs.
Any additional damages will most likely be more specific, such as punitive damages in the case of malicious or reckless behavior on the part of the insurer. Depending on the state a policyholder can win up to three times the original damages.
How Should I Prepare for a Bad Faith Claim?
If you think it’s time to file a bad faith claim, you may be wondering what to do next. The first action step you can take is saving and documenting all correspondences with the insurer. This will help your attorney make a case. Here is a list of documents they may need.
- Bills, medication lists, treatment explanations, hospital admittance dates and any other relevant medical information.
- Copies of police reports.
- Photo-graphical evidence of the injury or accident.
- Information about your insurance policy and company.
Bad faith claims help protect policyholders from unfair insurers. Though it may seem daunting, the process can be made easier by answering a few basic questions for yourself and by consulting a good attorney.