Insurance is used to protect you and your family against financial loss in case of an unexpected life event or a costly lawsuit. When you purchase an insurance policy, you’re also paying for the peace of mind that comes with knowing you are covered by your insurer, as long as you maintain coverage.
This transaction also means your insurer owes you fairness and a duty to uphold their end of the deal. Unfortunately, insurance companies don’t always do that. In order to save money, insurance companies may be deceptive, misleading, or elusive to avoid payouts. This is called bad faith insurance, and it can lead to a bad faith lawsuit.
If you suspect your insurer is acting in bad faith, the attorneys at Cox, Cox, Filo, Camel & Wilson can help. Call our Lake Charles office at 337-436-6611 or toll free at 800-836-3702. You can also set up your free initial consultation by filling out a contact form online.
What Is Bad Faith Insurance?
Bad faith insurance refers to the behavior of insurance companies when they try to avoid their contractual obligations to their policyholders.
Insurers must be honest and transparent about their decisions. When an insurer refuses to pay a legitimate claim or avoids taking action to investigate or process a claim, that can be called “acting in bad faith, or simply “bad faith.”
How Does an Insurer Act in Bad Faith?
There are many types of ways an insurer can act in bad faith. For example, acting in bad faith can include behaviors such as:
- Misinterpreting or mistranslating their own policy language and terms and conditions
- Delaying the investigation or resolution of a claim to an unreasonable extent
- Failing to conduct a thorough investigation
- Refusing or failing to reasonably explain why a claim has been denied
- Making arbitrary demands regarding the insured’s proof of loss document; i.e., requiring unreasonable proof about the scope of your loss or property damage
- Refusing to pay a covered claim
- Asking the insured to pay a partial sum of the financial settlement when unnecessary
Bad faith insurance can apply to any type of insurance policy: health insurance, life insurance, auto insurance or homeowners’ insurance.
It’s important to note that an insurance company making a simple mistake does not constitute bad faith. Nor does an insurer making a decision that you disagree with. You must provide evidence showing that your insurance company was negligent, evasive, deceptive, or even malicious to prove that they were acting in bad faith.
What Can I Do If I’m a Victim of Bad Faith?
Each state has a set of laws that are meant to protect consumers against bad faith practices. Louisiana’s “Good Faith law” states that:
“An insurer…owes to his insured a duty of good faith and fair dealing. The insurer has an affirmative duty to adjust claims fairly and promptly and to make a reasonable effort to settle claims with the insured or the claimant, or both. Any insurer who breaches these duties shall be liable for any damages sustained as a result of the breach.”
If you suspect your insurer is acting in bad faith, you can file a bad faith insurance claim to recover damages or monetary compensation.
Under the Good Faith law, the following acts committed by your insurance company constitute bad faith:
- Misrepresenting pertinent facts or terms in your policy
- Failing to pay a settlement within 30 days after an agreement
- Denying coverage or an attempt to settle a claim
- Acting in a misleading manner
- Failing to pay a claim within 60 days after “receipt of satisfactory proof of loss”
- Not only acting or failing to act, but “did so arbitrarily, capriciously, and without probable cause.”
Since you are filing a claim against your insurer, the “burden of proof” is on you to provide evidence that they violated the Good Faith law.
What Kinds of Compensation Can I Receive for My Claim?
In Louisiana, there are different types of damages you can recover by filing a claim under the Good Faith law. You may recover general damages, special damages, and statutory penalties, depending on your situation.
If, for example, your insurance company fails to pay a claim within 30 days after satisfactory proof of loss, they may be required to pay a penalty of 50% of the loss or $1,000, whichever is greater, as well as attorneys’ fees and costs.
If your insurance company fails to pay a claim within 60 days after satisfactory proof of loss, they may be required to pay up to two times the amount of the actual damages or $5,000, whichever is greater.
Other damages your insurer may have to pay include consequential damages, emotional distress damages, and even punitive damages. If your insurer’s actions are especially bad, you may be awarded punitive damages to punish them for their behavior. In Louisiana, the punitive damage amount is up to two times the damages sustained or $5,000, whichever is greater.
How an Insurance Attorney Can Help
As you can see, there are many types of behaviors that may constitute bad faith. There are also various types of damages you can seek when filing a bad faith insurance claim. Because it is your responsibility to file the claim and provide solid proof that your insurer acted in bad faith, the claims process can be lengthy, complicated, and confusing. That’s where an experienced bad faith insurance lawyer can help.
Our team of “bad faith insurance” lawyers at Cox, Cox, Filo, Camel & Wilson can guide you through the bad faith claims process and help you make the best decisions for you and your family. We’ll also stand with you against your insurer and fight for the financial compensation you deserve to move forward.
If you believe you have a possible bad faith insurance claim in the state of Louisiana, call our Lake Charles office at 337-436-6611 or toll free at 800-836-3702. You can also get in touch with our office to set up a free consultation by filling out an online form, and follow our Facebook page for more legal resources.