Have you diligently paid your insurance premiums each year, but experienced a dishonest response from your insurance company when you filed a claim?
You expect your insurance policy to come through in your time of need, but insurance companies don’t always play by the rules.
Sometimes insurance companies put profits over the people they’re supposed to help and don’t pay claimants fairly.
Insurance companies in Alabama have a “duty of good faith and fair dealing” that is implied in every contract. This means that the insurance company must uphold its end of the bargain and honor the terms of your policy contract.
When an insurance company wrongfully denies your claim or pays you less than you deserve, the insurance company operates in bad faith.
What Are the Elements of a Bad Faith Claim?
Alabama law first recognized the tort of insurance bad faith in 1981, in a case named Chavers v. National Security Fire and Casualty Co.
In that case, and others that followed over the next few decades, the Alabama Supreme Court developed the elements of insurance bad faith. The tort of bad faith normally occurs when there is:
- An insurance contract between the parties,
- A breach of that contract,
- An intentional refusal to pay the insured’s claim,
- The absence of any reasonably legitimate or arguable reason for that refusal, and
- The insurer’s actual knowledge of the absence of any legitimate or arguable reason.
However, the court also recognizes bad faith in another situation. In what the court has dubbed an “abnormal bad faith” claim, the insurance company:
- Intentionally or recklessly fails to investigate the plaintiff’s claim and
- Denies the claim from a standpoint of failing to investigate.
In either case, an insurance company fails to fulfill contract terms and treats a policyholder unfairly.
In Chavers, the court said that the entire purpose of an insurance contract is for the insurer to “protect the insured at his weakest and most perilous time of need.”
To take advantage of an insured person in a vulnerable situation is unethical business practice.
Examples of Bad Faith Actions
Insurance companies don’t act in bad faith every time they deny a claim. However, if an insurer uses deceptive tactics to avoid paying, they could be liable for this tort.
These actions indicate that an insurance company may be acting in bad faith:
- Refusing to investigate a claim,
- Delaying payment for valid claims,
- Refusing to provide a written explanation of why a claim was denied,
- Denying a claim for no reason,
- Failing to communicate important information to the policyholder,
- Making unreasonable demands to discourage claims, and
- Paying less than a claim is worth.
An insurance company should act professionally and ethically when handling a claim. Any of these bad faith actions indicate that a policyholder needs to contact an Alabama bad faith insurance claims lawyer to hold the insurance company accountable.
How Do You Prove an Insurance Company Acted in Bad Faith?
To prove your insurance company acted in bad faith, you must present evidence that they acted unreasonably. Present this evidence to support your claim:
- Insurance policies,
- Insurance payment receipts,
- Communications with the insurance company, and
- Photographs of damage.
When you are communicating with the insurance company regarding any claim, you should write down the name of the person you talked to, the date, and a summary of the conversation.
What Compensation Is Available for Victims of Bad Faith?
If your insurance company acted in bad faith, they may owe you money. You can recover the following types of compensation for the insurance company’s bad faith action:
- Compensatory damages for financial losses,
- Compensatory damages for emotional harm, and
- Punitive damage.
While financial losses are calculated based on receipts and professional estimates, compensatory damages that you can seek for emotional harm are not so limited—the jury determines how much money they think you deserve.
The court allows testimony of mental conditions such as anxiety, embarrassment, fear, frustration, worry, anger, and inconvenience to serve as an indication of emotional harm.
Punitive damages, designed to punish a wrongdoer and deter others from bad faith behavior, are sometimes available when the insurance company’s behavior is especially egregious.
Do You Need a Bad Faith Insurance Attorney?
Insurance companies are experienced at denying their bad faith actions and dodging complaints.
Often, their only concern is making a profit. To hold them accountable and get the money you deserve, you need an experienced bad faith insurance lawyer.
An attorney can help with your bad faith claim by doing these tasks:
- Helping you gather evidence,
- Calculating the value of your claim,
- Negotiating with the insurance company for a fair settlement,
- Preparing you to answer questions from your insurance company, and
- Taking your case to court if the insurer refuses to settle.
Bad faith claims can be difficult to prove. If you are suing your insurer on a bad faith claim, saying that there was no legitimate reason to deny your claim, then you must be prepared to defend your assertion.
If an insurance company presents even one “legitimate reason” for the denial, your lawsuit could fail. A skilled attorney knows what insurance excuses to anticipate and prepares a carefully researched rebuttal for each excuse.
A bad faith insurance claim attorney can help you determine what legal tactic will work best for your lawsuit. For instance, your attorney can explain the difference between filing a breach of contract claim and a bad faith claim.
One key difference is that a breach of contract claim allows you to recover only the amount owed under your policy, whereas a bad faith claim allows you to recover emotional damages and punitive damages.
A bad faith insurance attorney will help you determine the legal strategy most likely to get you the maximum compensation.
Contact an Attorney for Your Bad Faith Claim
If you think your insurance company is acting in bad faith, our attorneys may be able to help. At the Fob James Law Firm, our bad faith insurance lawyers in Alabama know the sneaky tactics insurers use to avoid paying your claim.
We have helped many clients prevail against deceptive insurance companies, and we give each client the utmost attention by providing legal representation with compassion.
Contact us today if you would like us to evaluate your bad faith insurance claim.