When you purchase an insurance policy, you are buying protection and peace of mind. It’s important to know your insurance company will be there to help you should a covered event occur. If an insurer deliberately denies a claim for unjust reasons or without conducting a proper investigation, you may be able to pursue a bad faith action.
No matter what form the insurance bad faith takes, it can cause big problems and you don’t have to accept their actions. The following steps will guide you through how to file a bad faith insurance claim.
Step 1: Review Your Insurance Contract
An insurance policy is a contract between you and the insurer. Before you can file a bad faith lawsuit, you need to know if there’s been a violation of your contract. Start by getting a copy of the full version of your contract for review. Make sure it’s dated before you filed your claim. If possible, it’s a good idea to get a copy of your policy before you file your claim. Make certain your claim is covered under the terms of your contract.
Step 2: Keep Logs on Your Claim
You need to prove the validity of your original claim and that it falls within the terms of your policy. Gather all your documents and evidence. This can include photos provided to the insurance company, reports, receipts, estimates and correspondence with the insurance company. Put together a log detailing calls or meetings with the insurance company. Note the date, who was involved and what was generally discussed.
Step 3: Document Denial of Claim
If your claim is denied, request that a supervisor at the insurance company review the claim and denial. If the denial is not reversed, consider appealing to your state's insurance regulatory agency, which is a state office charged with reviewing contested insurance claims. It is possible that during the review process your insurer will reconsider their denial of coverage. Again, document all your interactions with the insurance company and their statements regarding the denial.
Step 4: Make a Final Demand
Before you file a lawsuit, you need to show that you tried to settle your claim. Send a written demand letter detailing your claim. Get proof of mailing by using a return receipt. The insurer has between 15 to 60 days from when you made a demand to pay that claim. Advise the insurer of your intent to pursue a claim for bad faith if the claim is not appropriately and timely paid. Unless the insurer refuses to pay the claim within that time, you cannot file a lawsuit for bad faith before the time allowed for the insurer to respond has passed.
Step 5: File a Complaint with Your State’s Department of Insurance
Each state has a department of insurance that regulates insurance companies and how they handle claims. If you haven’t received a timely settlement, or you feel your claim has been mishandled, you can file a complaint with your state’s department of insurance. Services provided vary by state, but most will attempt to resolve your dispute through mediation. You can file a lawsuit and a complaint with your state’s department of insurance. Although, doing both would limit the state’s ability to seek a resolution through mediation.
Step 6: Initiate a Bad Faith Lawsuit
Filing a bad faith lawsuit against an insurance company is not a simple task. You’ll need to decide whether to file in state or federal court. Plus you will need to select a forum that has jurisdiction over the defendant insurance company. Your complaint will likely also include additional claims such as fraud, breach of contract, and negligence. You should seek compensation under the policy as well as damages for the insurance company’s bad faith. If the insurance company eventually decides to settle the claim, you can still pursue your bad faith lawsuit.
Work with an Attorney on Your Bad Faith Insurance Claim
Every state has laws protecting consumers from bath faith tactics by insurers. Pursuing a claim by yourself can feel like an uphill battle. An experienced lawyer will help you stand up to an insurance company that has compromised your claim with bad faith tactics. Consult with an insurance attorney to learn more about the bad faith claim process in your state.