BAD FAITH INSURANCE SETTLEMENT PRACTICES
HAS YOUR OWN INSURANCE CARRIER FAILED YOU? It is thought to be the stuff of movies – see for example, The Rainmaker – the evil insurance company that knowingly denies a claim in bad faith because it thinks the insured will not be able or willing enforce the contract. But it happens! While we would all like to think that the vast majority of insurance companies are responsible corporate citizens and for the most part do the right thing, I have encountered instances where my clients were unjustly denied their claims under insurance policies for which the premiums had been paid in full and where coverage seemed appropriate – even obvious.
NOT ALL INCORRECTLY DENIED CLAIMS ARE “BAD FAITH.” Remember, a mere wrongful denial of a good claim is not, without more, “bad faith.” There is such a thing as a good faith mistaken denial of a valid claim. There must be a pattern of practices or intentional wrongful conduct to constitute “bad faith.” Thankfully these bad faith cases may be few and far between but if and when it happens to you, the feeling is one of having been violated or robbed! Referred to as “first-party” insurance claims – claims where the insured is forced to sue his or her own insurance carrier – these cases are vigorously defended by the insurance company defendant and are complicated and difficult to litigate. If you believe this has happened to you, you will want an attorney who has successfully prosecuted such a case from start to finish and who has held such an insurance company responsible for its egregious bad faith settlement practice.
SUCCESSFUL EXPERIENCE LITIGATING INSURANCE BAD FAITH CLAIMS. In one such case in Johnson County, Indiana, I was able to obtain a jury verdict against a major Indemnity Insurance Company and a multi-national Insurance Group, in the amount of $1,520,824.00, of which $1,000,000.00 was for punitive damages due to the insurance company’s deliberate bad faith settlement practices. A similar case for another of my clients (in Federal Court), also against one of the same companies, settled for in excess of $350,000.00. Because the second case settled prior to trial, bad faith was not proven in that case but coverage was obtained for my client via the settlement. In both cases my clients had paid their premiums on time and complied with all of the requirements for making a proper claim under their insurance policies. The carrier simply did not want to pay the claims and apparently viewed their denials as a risk of doing business, hoping the customer would not have the willingness or means to pursue the matter in court. The insurance carriers were mistaken, and I was retained and succeeded in holding them accountable.
INSURANCE IS A FACT OF LIFE. We all are inexorably bound up with insurance companies. It is a fact of life and a necessary inconvenience. When we fulfill out part of the insurance contract and pay our premiums on time and comply with the requirements for filing a bonafide good faith claim under the policy, we have every right to expect the insurance company to live up to its end of the bargain and pay the claim! There are often perfectly sound reasons why an insurance company might deny a claim, and most claim decisions are no doubt made in good faith, even when they are mistakenly denied. However, when the facts suggest that a claim denial is arbitrary or capricious, or the result of bad faith practices, the law provides for severe remedies. When true “bad faith” denial of a valid insurance claim is proven, punitive damages are appropriate and available under Indiana law.
NAVIGATING THROUGH A TYPICAL INSURANCE POLICY IS NOT FOR THE FEINT OF HEART! Have you actually tried to read and understand any insurance contract? (Yes, an insurance policy is a “contract.”) It is not for the timid! A typical insurance policy is rife with complicated multiple cross references and definitions, terms defined within terms. It takes a slow, methodical piecing together of exceptions and exclusions and exceptions to the exclusions. It has been my experience that the complexities of these contracts have the effect (whether by design or not) of discouraging the consumer from even trying to decipher whether coverage has been correctly denied. Reading through and understanding an insurance policy is not a casual experience to be undertaken lightly. It is a step-by-step unscrambling of the egg! When you have a question about possible wrongful denial of your claim, rely on an attorney who is experienced and familiar with the language and organization of insurance policies. As an attorney with years of experience navigating and deciphering a wide variety of insurance policies, I can assist you with the task of understanding your policy and determining whether a covered event has in fact occurred for which you should be compensated.
However, the plaintiff in such a case today will only be able to retain 25% of any punitive damage award due to changes in the law. The remaining 75% of such an award will be paid into the victims fund established by the Indiana legislature. Regrettably, this reduction in the amount of punitive damages retained by the innocent victim of the bad faith settlement practice, itself may have the effect of deterring many wronged insureds from pursuing such claims against their bad faith insurance carriers.
CALL FOR A FREE CONSULTATION ABOUT THE DENIAL OF YOUR INSURANCE CLAIM. If you have any doubt about whether a claim you have filed with your own insurance company was wrongfully denied, please call for a free preliminary consultation. Keep in mind that a wrongful denial may not be in bad faith! Reasonable minds might differ as to whether a given set of facts might pull a claim into a covered event – it takes more than merely being mistaken about coverage to constitute bad faith. Either way, when you call you may learn something about your insurance policy in the process, whether you retain me or not, and if there appears to be questionable or arbitrary decisions made by your adjuster, we can explore your matter in greater detail to determine whether you may have a first-party bad faith claim against your insurance carrier. Please remember that making this initial, preliminary contact will not in itself create an attorney client relationship although anything you discuss or share during that call or visit will be treated as and remain confidential.