What Makes an Insurance Claim Denial "Bad Faith"?
At Hinrichs & Scott Injury Trial Lawyers, we understand how frustrating and overwhelming it can feel to have your insurance claim denied. When you faithfully pay your premiums, you expect your insurance company to uphold their end of the agreement.
However, not all denials are legitimate. Some may fall under what is legally referred to as "insurance bad faith."
Understanding what constitutes bad faith is critical to protecting your rights and pursuing fair compensation. Our firm brings a client-centered approach to every case, using our insider knowledge of the insurance industry to provide precise and compassionate representation. Let’s explore what bad faith means and how it impacts your case.
Defining Insurance Bad Faith
Insurance companies have a duty to act in good faith when handling claims. This means they are obligated to investigate, evaluate, and pay legitimate claims promptly and fairly. When they fail to do so, their actions may be considered bad faith.
Common Examples of Bad Faith
Unreasonable delays: Failing to process a claim within a reasonable timeframe without justification.
Lack of communication: Ignoring or avoiding correspondence regarding the status of your claim.
Unjustified denials: Denying a claim without providing a valid explanation or citing irrelevant policy provisions.
Underpayment of claims: Offering settlements far below what is fair or necessary to cover damages.
Failure to investigate: Refusing to thoroughly review evidence or assess the validity of your claim.
These actions can significantly impact claimants, leaving them without the financial support they need during challenging times.
How to Identify Bad Faith in an Insurance Claim Denial
Recognizing bad faith in an insurance claim denial involves understanding the obligations of your insurer and how their actions deviate from these responsibilities. Here are key indicators:
Signs of Bad Faith Practices
Misrepresentation of policy terms: The insurer deliberately misinterprets or misstates your coverage to deny your claim.
Delaying payment without reason: Prolonged delays in processing or issuing payment without valid cause.
Demanding unnecessary documentation: Requiring excessive or irrelevant paperwork to stall the claim process.
Accusing you of fraud without evidence: Alleging dishonesty without providing substantial proof to support the claim.
When these tactics arise, it’s important to document everything, as this evidence can play a critical role in pursuing a bad-faith case.
Legal Standards for Bad Faith in Missouri
Missouri law outlines specific criteria that insurance companies must meet to avoid acting in bad faith. Understanding these standards can help you determine whether your claim denial qualifies.
Duties of Insurers Under Missouri Law
Duty to investigate: Insurers are required to conduct a thorough investigation before denying a claim.
Duty to provide justification: Denials must be accompanied by a clear and reasonable explanation.
Duty to settle claims fairly: Insurers must attempt to resolve legitimate claims in good faith rather than prioritizing their financial interests.
Failure to meet these obligations can expose an insurance company to legal liability, making it possible for you to pursue damages.
Examples of Missouri Bad Faith Cases
Several legal precedents in Missouri highlight how bad faith practices have been handled in court. These cases demonstrate the importance of holding insurers accountable and illustrate the damages that can be pursued when bad faith is proven.
Steps to Take if You Suspect Bad Faith
If you believe your insurer has acted in bad faith, taking the right steps is essential to protect your rights and strengthen your case.
Four Critical Steps
Gather evidence:
Keep copies of all correspondence with your insurance company, including emails, letters, and recorded phone calls.
Collect documentation related to your claim, such as policy information, estimates, and medical records.
Request a written explanation:
Ask your insurer to provide a detailed justification for their denial or delay in writing.
Consult an attorney:
A knowledgeable insurance bad-faith lawyer can review your case and identify whether you have grounds for a lawsuit.
File a complaint:
Report the insurer’s actions to the Missouri Department of Insurance, which can investigate and take action if necessary.
These steps can help you build a strong foundation for pursuing a bad-faith claim.
Damages Available in Bad Faith Claims
When an insurance company acts in bad faith, it may be held accountable for more than just the original claim amount. Missouri law allows for additional damages in these cases.
Types of Damages You May Recover
Compensatory damages: Reimbursement for financial losses caused by the denial, such as unpaid medical bills, repair costs, or lost wages.
Emotional distress: Compensation for stress, anxiety, or other emotional harm resulting from the insurer’s actions.
Punitive damages: Monetary penalties are designed to punish the insurer and deter future bad faith practices.
By pursuing these damages, you can seek justice while holding the insurer accountable for their misconduct.
Real-Life Impacts of Bad Faith Damages
Recovering damages in an insurance bad faith case can help individuals rebuild their lives after financial and emotional hardships. These outcomes demonstrate the value of pursuing justice against unscrupulous insurers.
What an Attorney Can Do in Bad Faith Claims
Working with an experienced attorney can make a significant difference when pursuing a bad-faith claim. At Hinrichs & Scott Injury Trial Lawyers, we combine technical precision with a client-focused approach to deliver exceptional representation.
How We Can Help
Analyzing your case: We’ll review your insurance policy, claim details, and evidence to identify instances of bad faith.
Negotiating with insurers: Our firm will handle communications and negotiations to advocate for fair compensation.
Litigating when necessary: If the insurer refuses to resolve the issue, we’re prepared to take your case to court and fight for your rights.
Our understanding of both sides of the insurance process allows us to anticipate strategies and build a strong case on your behalf.
Preventing Bad Faith Issues
While bad faith can sometimes be unavoidable, there are steps you can take to minimize the risk of claim denials and disputes.
Tips for Protecting Your Claim
Understand your policy: Familiarize yourself with your coverage, exclusions, and obligations to avoid misunderstandings.
Document everything: Keep detailed records of the incident, including photos, receipts, and witness statements.
Communicate effectively: Respond promptly to requests for information and maintain a professional tone in all correspondence.
Seek legal advice early: Consulting an attorney during the claims process can help you identify potential issues and address them proactively.
By taking these steps, you can reduce the likelihood of encountering bad-faith practices and improve your chances of a successful claim.
The Broader Impact of Insurance Bad Faith
When insurers engage in bad faith practices, it affects not only the individuals involved but also the integrity of the insurance system as a whole. Holding insurers accountable promotes fairness and transparency, making sure that others aren’t subjected to the same unfair treatment.
Why Accountability Matters
Protecting consumers: Legal action against bad-faith practices helps safeguard consumers from unethical behavior.
Encouraging fair practices: When insurers are held liable for misconduct, it sets a precedent that discourages similar actions in the future.
Restoring trust: Pursuing justice helps rebuild trust between policyholders and insurers, strengthening the relationship for all parties involved.
Understanding the broader implications of bad faith claims highlights the importance of addressing these issues promptly and effectively.
Reach Out to an Attorney
If you suspect your insurance company has acted in bad faith, don’t hesitate to seek legal assistance. At Hinrichs & Scott Injury Trial Lawyers, we serve clients in Kansas City, Missouri, and surrounding areas, including Jackson County, Clay County, Platte County, Cass County, Wyandotte County, and Johnson County in Kansas.
Contact us today to discuss your options and take the first step toward holding your insurer accountable to insurance bad faith.
