How to File and Win a Bad Faith Insurance Claim

According to Kaiser Family Foundation, 17 percent of in-network claims were denied in 2021.

Bad faith on behalf of insurance companies has been in the news lately. Luigi Mangione, who is accused of killing UnitedHealthCare CEO Brian Thompson, referenced a book by Jay M. Feinman entitled “Delay, Deny, Defend.”

With bad faith on behalf of insurance companies in the news, you may be wondering how to sue an insurance company for bad faith.

Our law firm, since 1990, has been helping people whose claims were unfairly denied by insurance companies. We have recovered over $750,000,000 for our clients, and our experience will allow us to recover the most compensation possible for you.

When insurance companies act in bad faith, we represent victims on a contingency fee basis, meaning no fee is charged until and unless we obtain a recovery. The only fee we’ll charge to force an insurance company to honor their insurance contract is a percentage of any compensation we recover for you – no upfront or out-of-pocket fee will be charged.

Call us today for a free consultation, text us from this page or fill out this page’s free case evaluation form if you or a loved one is a victim of insurance bad faith.

What Is a Bad Faith Claim?

“Bad faith claims” refer to legal actions which are taken against insurance companies after valid claims, such as liability insurance claims, are unreasonably under-valued or denied. Insurance companies engage in bad faith conduct in several ways, including by:

• Misrepresenting insurance policy terms
• Not properly investigating claims
• Delaying payment deliberately

These are examples of insurance companies acting in a way which is not in good faith, or not fair, towards the holder of the policy. These tactics imply that insurers are attempting to avoid having to pay out on claims despite not having a valid reason. The reason for this is typically in order to save money.

Bad faith claims often include:

• Inadequate investigation: Not conducting thorough investigations into claims is an example of bad faith.
• Behaving unreasonably: The primary claim made in bad faith claims is that insurers act unreasonably when they handle claims as opposed to simply making mistakes.
• Delay tactics: This involves deliberately delaying paying or processing claims with no good reason. Insurance companies have a requirement to deny or pay claims inside of a reasonable period of time.
• Misrepresentation: This involves intentionally misleading policyholders regarding policy terms or coverage.

For example, an insurer might deny a claim involving a car accident despite not even reviewing medical records or a police report. The insurer could claim that the crash wasn’t the fault of the policyholder despite evidence suggesting otherwise. This would be an example of bad faith on behalf of an insurer.

How to File a Bad Faith Lawsuit Against an Insurance Company

Bad faith lawsuits are legal actions taken by claimants against insurance companies who treat them unfairly or deny their claims unreasonably. Bad faith laws exist in order to encourage insurers to pay claims and treat claimants fairly. If your insurer fails to act in good faith regarding your insurance claim, you should contact a lawyer at our firm to initiate a bad faith lawsuit. We will take care of everything from there.

In California, claimants can sue over bad faith when insurance companies:

• Fail to fulfill their contractual obligations
• Misrepresent facts or policy terms
• Unreasonably deny claims
• Make unreasonable requests
• Knowingly offer settlement amounts which are clearly lower than you are entitled to
• Fail to properly investigate claims
• Delay processing claims
• Mislead claimants regarding filing deadlines
• Refuse to settle claims even when clear liability exists
• Threaten to force claimants to accept unreasonable settlements
• Advise claimants not to hire lawyers

If your insurance company fails to act in good faith, the steps involved in filing a lawsuit will be:

• Review your contract: You are going to have to be able to prove that your claim is valid. So, review your contract with the insurance company and make note of all deadlines, exclusions, etc. which are listed. This will help you prove that you followed all steps which are appropriate and that you meet any terms of things that should get covered. In general, when things aren’t explicitly stated as being excluded they should get included. Take care regarding limits on where and when claims may be filed. Certain insurers require notice as soon as possible, and for a lawsuit to be filed in a year or less.
• Collect evidence: Gather evidence which shows that bad faith exists on the part of the insurance company. This will include any evidence regarding loss, estimates regarding replacement or repair of personal property, such as evidence which demonstrates that what was offered by the insurer for replacement or repair did not accurately reflect the property’s value, correspondence with reps for the insurance company, medical treatment bills under contracts, as well as logs of who you spoke to with insurance companies, when you spoke with them, and what you talked about. Make sure everything is written down.
• Appeal your denial: Should your claim get denied, ask for the claim to be re-reviewed by a supervisor. Send a demand in writing. Ask for a reply in writing. Make it very clear that if your denial is not reversed or you are not given a justifiable, reasonable explanation for a claim denial, you intend on filing a lawsuit. You could see a bad faith claim thrown out should the insurance company not be given a fair chance to make sure your claim is fulfilled prior to you filing a lawsuit.
• Contact an attorney promptly: Nadrich Accident Injury Lawyers have vast experience in handling bad faith claims. It will cost you nothing to talk to our lawyers. You will not be obligated to hire us after talking with us regarding your case. Deadlines may exist regarding filing a lawsuit, and these deadlines may depend upon the kind of bad faith displayed by the insurer.

Most lawsuits filed against insurers settle through mediation or negotiations prior to trial. We can explain your legal rights and the responsibilities of the insurance company, as well as help you to investigate your possible financial recovery.

Legitimate Reasons for Insurance Claim Denial

Numerous reasons, which can be valid, exist for insurance companies to deny your claims:

You Might Be Liable for Damages

Depending upon your state’s liability laws, you could lack the right to seek damages if you are partially, or at least 51% at fault for the accident.

Your Policy Might Not Be Current

Insurers will typically not be capable of providing financial support when you haven’t fully paid your policy when the accident occurred.

Expired Statute of Limitations

After accidents occur, strict deadlines exist for filing claims. Should you not file your claim within the time limit, you might be ineligible to recover compensation.

You Could Have Broken the Law When the Accident Happened

This can apply to premises liability or car accident cases. For example, you might see a claim denied if you were driving without a valid license when the accident occured.

Your Accident Might Not Be Covered by the Policy

Insurance policies often specifically state which circumstances aren’t covered. As an example, certain homeowner policies won’t cover fire or flood damage, referring to these damages as “acts of God.”

You Didn’t Verify Your Damages

Sometimes, insurers might ask for substantiating evidence like medical records for your claim to be processed. Your claim could get rightfully denied if you don’t submit this evidence.

Examples of Bad Faith Insurance

Insurance Claim Denial Without Reason

It can be very distressing when valid claims are denied wrongfully. This may be quite distressing when people rely on insurance to recover adequately from losses. Denials like this can be the result of many things, including unfounded allegations, misinterpreted policy language, or intentional attempts to avoid having to pay out claims.

As an example, a policyholder might have a pipe burst inside their home and end up with significant water damage. They notify their insurer promptly, give the insurer all documentation necessary, and fully cooperate with the insurer’s claims process. The insurer, though, without justification which is valid, ends up denying the claim, mentioning a policy clause which is obscure and fails to apply to the circumstances.

Payment Delays

When insurers approve claims, you have a right to get paid within a reasonable time period. When insurers unjustifiably prolong payment, it can place undue emotional distress and financial strain on you, who are relying on timely compensation for replacements, repairs or medical treatment. Insurers are duty bound to promptly process and investigate claims. Unreasonable delays in doing so constitute breaches of their duty of fair dealing and good faith.

As an example, suppose you’re in a car accident and you file a claim which is legitimate for your medical bills and other damages. The insurer, despite receiving all evidence and documentation necessary, drags out the process unnecessarily over a very extended period of time. They might repeatedly ask for additional information or fail to promptly communicate about your claim’s process.

Lowball Payout Offers

It is common for insurers to offer claimants less money than the true value of their claims. When insurance companies intentionally make lowball offers, they are not acting in good faith.

As an example, a motorist could incur a necessary and reasonable amount of medical expenses which total $20,000 following a car accident. The motorist could possess $6,000 of medical payments insurance. However, the insurance company ends up unreasonably only offering to pay $1,500 worth of medical expenses.

Coercive Tactics

This involves usage of intimidating or aggressive strategies by insurers to discourage claimants from pursuing their claims. This can create environments of pressure or fear, leading to claimants hesitating to stand up for their rights. These tactics can include threatening to deny claims, making misleading statements regarding coverage, or attempting to manipulate claimants into accepting settlements which are inadequate.

As an example, an insurance adjuster could insist that if a claimant further pursues a claim, they could see their policy canceled or see a substantial increase in premiums.

Intentional Misrepresentation

Should your insurer intentionally misrepresent the law or your policy’s language, and deny your valid claim based upon said misrepresentation, you could have a bad faith claim against your insurer. Insurance companies need to make truthful statements regarding your policy and the law in order to remain in good faith.

As an example, an insurer could tell a claimant that they might commit insurance fraud for committing an honest error while submitting a claim, like submitting an incorrect address, phone number or date.

How Much Is A Bad Faith Lawsuit Worth?

A bad faith lawsuit’s value can vary depending upon the case’s specifics. The value will usually include the amount of the original claim which the insurer should have paid the claimant, as well as additional damages such as emotional distress, interest and attorney fees. Punitive damages may also be included in situations which are egregious. This means the total value may be a lot higher than the amount of the initial claim.

Factors which can influence a bad faith claim’s value include:

• Original claim amount: This is the size of the initial claim with insurance which got handled improperly.
• How severe the misconduct was by the insurer: This is how intentional or egregious the actions of the insurer were in delaying or denying the claim.
• The evidence’s strength: The quality of proof and documentation which supports the bad faith claim.
• Consequential damages: This means any additional emotional distress or financial losses which were directly caused by the bad faith of the insurance company.
• Jurisdiction laws: There are varying rules in different states about potential damages in bad faith claims.

It’s important to remember:

• Contract damages: This is the basic amount which is owed regarding the insurance policy. This includes interest.
• Extracontractual damages: This includes additional damages such as mental anguish, inconvenience and emotional distress caused by bad faith.
• Punitive damages: When insurers act with gross negligence or malice, courts could award punitive damages in order to deter misconduct in the future and punish insurers.

In summary, if you win your bad faith lawsuit, you can recover:

• Benefits you were denied wrongfully
• Attorney fees
• Emotional distress damages
• Compensation for additional economic harm
• Punitive damages, should the conduct by the insurance company be particularly outrageous

Signs Your Insurance Is Acting in Bad Faith

Signs your insurer is acting in bad faith include:

• Not communicating
• Excessive delays
• Unclear explanations
• Repetitive inspections
• Lowball offers
• Blaming you
• Refusing to pay
• Pressure tactics
• Changing policies

Contact a Lawyer Today

It can be challenging to prove bad faith. Our law firm can increase your chances of winning a lawsuit by thoroughly preparing, understanding insurance laws in California, collecting comprehensive documentation, making sure your civil complaint is filed in the proper court, negotiating with insurers and, if necessary, presenting a strong case to a jury or judge.

Call us today for a free case evaluation if you or a loved one has had an insurance claim unfairly denied by an insurance company. We have been handling cases like yours for over 30 years and won’t charge you any fee until and unless we recover money to compensate you. Call us today.