A Bad Faith Claim Against an Insurance Company May Right the Wrongs It Caused
“Bad faith” can be defined as dishonesty, maliciousness, or deception. That’s the theme of Kentucky’s bad faith insurance laws, which allow those covered by insurers to sue them under narrow circumstances. It’s potentially a powerful legal weapon, but it must be used under the right circumstances to be effective.
There are many reasons to be justifiably upset at an insurance company. They may have lousy service, their rates constantly increase, or you think you should’ve gotten more for your claim. Bad faith claims require a high level of proof to sue your insurer because the Kentucky legislature doesn’t want every unhappy customer to sue their insurance company.
What Does Kentucky Law Consider Bad Faith by an Insurance Company?
Bad faith occurs if your carrier violates its duty of good faith and fair dealing when processing and deciding your claim. The Unfair Claims Settlement Practices Act of Kentucky mandates that insurance companies doing business in the state must address claims fairly and justly. If that doesn’t happen, it may be the result of bad faith, which can include the following:
- Misrepresenting pertinent facts or insurance policy language concerning the disputed coverage
- Failure to acknowledge and act reasonably and promptly after getting communications concerning policy coverage
- Failure to accept and put into place reasonable standards for promptly investigating claims
- Refusal to pay claims without a reasonable investigation based on all available information
- Failure to accept or deny claim coverage within a reasonable time after an insured completes loss statements
- No good faith attempts to promptly, fairly, and equitably settle claims where liability is reasonably clear
- Forcing insureds to sue them to obtain what’s due under an insurance policy by offering much less than the insured recovered in their eventual lawsuit
- Trying to settle a claim for less than what a reasonable man would’ve believed he was entitled to given the written or printed advertising that came with material accompanying or a part of a policy application
- Trying to settle claims based on an application that was altered without notice to, the knowledge or consent of the insured
- Failing to promptly resolve claims when liability is reasonably clear under one policy section to influence settlements under other parts of the policy
- Failing to promptly give a reasonable explanation of the policy reason concerning the facts or applicable law for denying a claim or offering a compromise settlement
Other legal sources can include judge-made common law on the topic and the state’s Consumer Protection Act, which prohibits false, unfair, deceptive, or misleading acts or practices by any trade or business (including insurers).
It may be difficult to understand what happened to your claim, why, and how the law was violated, so you should retain Satterley & Kelley, PLLC, for help.
What Types of Bad Faith Claims Are There?
Kentucky allows first and third-party claims.
First-party claims involve you and your carrier. They often cover unreimbursed claims, which can arise from many policy types, including auto, homeowner, disability, life, and health insurance. This would involve a claim to your carrier.
Third-party bad faith claims involve you and another party’s insurer. You submitted a claim to them, and they should’ve followed the law and paid you because of their insured’s liability.
How Can I Prove My Case?
These cases boil down to proving three things concerning the insurance company:
- It’s required to pay the claim under the policy’s terms
- It lacks a reasonable factual or legal basis to deny the claim
- It either knew it lacked a reasonable basis for the claim denial, or it acted with reckless disregard for whether a basis existed
“Bad faith” can be defined as dishonesty, maliciousness, or deception. That’s the theme of Kentucky’s bad faith insurance laws, which allow those covered by insurers to sue them under narrow circumstances. It’s potentially a powerful legal weapon, but it must be used under the right circumstances to be effective.
There are many reasons to be justifiably upset at an insurance company. They may have lousy service, their rates constantly increase, or you think you should’ve gotten more for your claim. Bad faith claims require a high level of proof to sue your insurer because the Kentucky legislature doesn’t want every unhappy customer to sue their insurance company.
What Does Kentucky Law Consider Bad Faith by an Insurance Company?
Bad faith occurs if your carrier violates its duty of good faith and fair dealing when processing and deciding your claim. The Unfair Claims Settlement Practices Act of Kentucky mandates that insurance companies doing business in the state must address claims fairly and justly. If that doesn’t happen, it may be the result of bad faith, which can include the following:
- Misrepresenting pertinent facts or insurance policy language concerning the disputed coverage
- Failure to acknowledge and act reasonably and promptly after getting communications concerning policy coverage
- Failure to accept and put into place reasonable standards for promptly investigating claims
- Refusal to pay claims without a reasonable investigation based on all available information
- Failure to accept or deny claim coverage within a reasonable time after an insured completes loss statements
- No good faith attempts to promptly, fairly, and equitably settle claims where liability is reasonably clear
- Forcing insureds to sue them to obtain what’s due under an insurance policy by offering much less than the insured recovered in their eventual lawsuit
- Trying to settle a claim for less than what a reasonable man would’ve believed he was entitled to given the written or printed advertising that came with material accompanying or a part of a policy application
- Trying to settle claims based on an application that was altered without notice to, the knowledge or consent of the insured
- Failing to promptly resolve claims when liability is reasonably clear under one policy section to influence settlements under other parts of the policy
- Failing to promptly give a reasonable explanation of the policy reason concerning the facts or applicable law for denying a claim or offering a compromise settlement
Other legal sources can include judge-made common law on the topic and the state’s Consumer Protection Act, which prohibits false, unfair, deceptive, or misleading acts or practices by any trade or business (including insurers).
It may be difficult to understand what happened to your claim, why, and how the law was violated, so you should retain Satterley & Kelley, PLLC, for help.
What Types of Bad Faith Claims Are There?
Kentucky allows first and third-party claims.
First-party claims involve you and your carrier. They often cover unreimbursed claims, which can arise from many policy types, including auto, homeowner, disability, life, and health insurance. This would involve a claim to your carrier.
Third-party bad faith claims involve you and another party’s insurer. You submitted a claim to them, and they should’ve followed the law and paid you because of their insured’s liability.
How Can I Prove My Case?
These cases boil down to proving three things concerning the insurance company:
- It’s required to pay the claim under the policy’s terms
- It lacks a reasonable factual or legal basis to deny the claim
- It either knew it lacked a reasonable basis for the claim denial, or it acted with reckless disregard for whether a basis existed
You, the plaintiff and party bringing the case, have the burden of proving that it’s more likely than not that the carrier acted illegally when handling your claim.
You must prove what they did wrong, which isn’t always easy, depending on the complexity of the claim and the company’s response. As you can see from the list above, there may be many details to the case to prove the company lied, created false documents, made decisions without a legal or factual basis, or intentionally short-changed you (among other things).
Evidence will vary depending on your case. It will help to keep organized, meticulous notes and files and keep a journal describing your conversations. These cases are often exposed by contradictions over time in:
- What was said to you and what other company employees discussed with each other
- Communications and documents sent to you and documents created internally
In these cases, discovery requests asking for documents, information, and depositions could be essential to their success. Critical evidence may include the following:
- The policy coverage at issue
- Corporate policies about communicating with policyholders, conducting investigations, and making coverage decisions
- Copies of communications to and from you, as well as relevant communications made by company employees involved
- The insurer’s claim file
Ideally, all this will be the basis for a successful case. One may generate a far greater award than what was originally at stake, and the insurer’s mishandling of your claims may qualify for punitive damages. They’re not intended to compensate you but to punish the insurer for its actions and discourage it and others from doing the same again.
Speak To a Personal Injury Attorney Today
If you believe you or your family is intentionally being cheated by an insurer who may be exercising bad faith in its dealings with you set up a free initial consultation where you can discuss the situation by calling our Louisville office toll-free at 855-385-9532. You may also complete our contact form if it’s more convenient.
We will be with you every step of the way, protect your best interests, and ensure you get the compensation you deserve.