Insurance companies provide policyholders with an invaluable sense of peace and security. In the event of an emergency, most insured people can rest easy knowing the emergency they are facing will not leave them bankrupt.
Unfortunately, sometimes insurance companies deny the benefits they promised to provide. When this occurs, many policyholders are left surprised and angry, especially when they think about the premiums they paid for protection.
If you believe your insurance company is withholding the benefits you paid for, you may be able to file a bad faith claim with the help of a bad faith insurance lawyer. A bad faith insurance attorney could help you understand how this process works and work with you to determine your next steps.
Insurance is essentially a contract binding an insurance company to a policyholder. Both parties are expected to carry out their expected duties: the insured pays their premium, and in turn, the insurer pays for any legitimate claims.
The legal concept of good faith and fair dealing is the belief that insurers and insured individuals are expected to act in an honest manner. Insurance companies are also expected to pay the benefits they promise in a timely manner and avoid engaging in behaviors that discourage policyholders from filing claims.
Since many insurance claim denials are legitimate, it can sometimes be difficult to tell whether a claim was denied in bad faith. This is especially true when someone does not have a lot of experience working with insurance companies. Any of the following actions by an insurer may be warning signs of a bad faith denial:
- Misrepresenting facts or providing false information to the policyholder
- Failing to take reasonable steps to investigate the circumstances surrounding the claim
- Failing to acknowledge or promptly process the claim
- Threatening or harassing the policyholder
- Being unable to provide a reasonable explanation for denying the claim
- Failing to deny or approve the claim within a reasonable time frame
- Discouraging the policyholder from consulting an attorney
The actions listed above are usually associated with bad faith. If an insurance company engages in them while denying a claim, a bad faith insurance attorney may be able to hold them liable in court.
In general, the law governing common torts allows policyholders to file a claim alleging bad faith if they can prove their insurance is wrongly withholding the benefits they are entitled to. To do this, they may need to provide proof of their coverage and evidence of their claim before they can file suit.
The policyholder must also prove their insurer is withholding the benefits for an arbitrary reason. However, the definition of unreasonable or arbitrary in this context is subjective, and alleging negligence on behalf of the insurance company does not guarantee a successful bad faith claim.
Filing a bad faith claim against an insurer can be intimidating, and more than likely, the insurer will have a team of its own lawyers to contest any claim made against them. A skilled bad faith insurance should know how to deal with insurance companies and their legal teams, and how to pursue a positive outcome on a plaintiff’s behalf in spite of them.
Some insurance policies—typically those provided by an employer—are governed by the Employee Retirement Insurance Security Act or ERISA. The most common examples of policies regulated by ERISA include life, health, and disability insurance, as well as many pension plans.
There are several differences between ERISA claims and other bad faith claims, with perhaps the most notable being the difference in appeals procedures. Under ERISA, a policyholder must fully exhaust the insurance company’s internal appeals process before filing a claim in court.
The second key difference is that ERISA does not allow for punitive damages. This means that, regardless of how absurd a denial was or how clearly it was in bad faith, a court cannot award the policyholder punitive damages. Because of these differences and the effect they can have on claims, it is important that any policyholder experiencing a bad faith denial on an ERISA policy speak with an experienced lawyer.
If your insurance company is withholding the benefits you paid for and deserve, it may be critical for you to take the time to understand the legal options at your disposal. Dishonest insurers should not be allowed to treat honest paying consumers in such a manner, and with the help of an attorney, you could stand up for your rights and pursue the coverage you need. Call a bad faith insurance lawyer today to get started.