Insurance companies have a duty to pay valid claims within the insured’s policy limits in a reasonable amount of time. However, in some instances, an insurer refuses to pay the fair value of a claim without a justifiable basis. When this happens, the insurance company can be sued for acting in bad faith, and the insured can recover money damages even in excess of the policy limits.
Bad faith by an insurer can take several forms. One of them is lowballing, which is when the insurance adjuster offers to settle a claim for a much lower amount than the customer should receive for the loss. For example, suppose that an insured customer’s car is totaled in an accident. The book value on that particular car is $15,000, but the insurance company only offers the customer $3,000 for the lost vehicle. In that case, the insurer would be negotiating in bad faith. The customer can then bring a bad faith lawsuit against the insurance carrier if it refuses reasonable compensation.
Another form of bad faith is stonewalling, which occurs when the insurer’s representative unjustifiably delays payment on a claim. For example, the representative might continually make requests for additional or duplicate information from the customer under the guise of needing more information to properly review the claim, or the representative might tell the customer that the claim needs to be reviewed by another department and/or someone of higher authority within the company. Another reason insurance companies may stonewall could be to move the insurance payout into a future fiscal quarter or fiscal year that might be more financially advantageous. Even if the carrier eventually pays, the customer is harmed by the delay in receiving funds for a legitimate loss.
If you suspect your insurance company is acting in bad faith, your first course of action should be to reach out to a qualified insurance lawyer who can examine the situation and determine the best course of action. When a customer is protected by competent counsel, insurers are less likely to act in bad faith and more likely to make favorable settlement offers. Also, there is a two-year statute of limitations for filing a lawsuit, which starts running once you discover an act of bad faith has occurred, so do not delay in seeking an attorney.
Lindsey Law Firm, P.C. in Tulsa, Oklahoma represents clients in a variety of insurance matters. If you believe that your insurer is acting in bad faith or you want help pursuing a claim, contact us online or call 918-587-0097 for an initial consultation.