Insurance Bad Faith Attorney Serving Ashland & Paintsville
Insurance companies do not always handle claims in a fair and aboveboard manner. When they fail to do so, they are acting in bad faith. There are several classes of insurance bad faith in Kentucky law, which fall into four basic categories: falsification, delay, refusal, and settlement.
Falsification Bad Faith
Falsification bad faith can include blatant acts, such as settling claims based on an application that was changed without the client’s permission or knowledge. There is little leeway in who can change application information. Even if applicants give permission for their information to be altered, they should be informed about the updates.
Another form of falsification is misrepresenting facts or policy terms involved in the case at hand or through advertising. Although this may seem clear cut, understanding this requires knowledge of the insurance industry and common policy provisions. Specialization in insurance law is a must for discovering this misrepresentation.
Delay Bad Faith
While less clear cut than falsification, delay bad faith is still easy to see. The main difficulty in these cases is establishing what is “reasonable.” All statutes dealing with delay bad faith include this standard. As with any other legal case, there can be a lot of confusion about what entails a reasonable time period or system.
Insurance companies are required to have methods for the quick investigation of claims and are required to respond to communication promptly. Once all the forms are submitted and the investigation is complete, the company has to confirm payment or deny the claim within a reasonable time period. If an insurance company delays any part of the process, it is liable for a bad faith charge.
One particularly insidious form of delay bad faith is a company requiring both a preliminary claims report and a proof of loss form. This may not seem a problem at first, but these reports convey the same essential information. Under Kentucky law, the insured should never have to submit both.
Refusal Bad Faith
Insurance companies are required to explain any claim refusal and give themselves an appropriate time for analysis before offering any type of settlement or refusal. They also need to have a system for the prompt investigation of claims. This allows insurance companies the time necessary to account for all the evidence and make a decision.
The claimant is required to give the insurance company a reasonable amount of time to investigate claims. In return, the company needs to make the effort to investigate and come to a fair appraisal. Rejections given too quickly are just as much an act of bad faith as delays in communication and settlement.
Settlement Bad Faith
This includes both the settlement of a claim and of a court case. Once liability has been assigned under one part of a policy, the insurance company is required to pay that portion of the settlement. Some companies will delay payment to influence other parts of the insurance agreement, which is illegal.
When making an effort to settle claims outside of court, insurance companies are required to offer reasonable settlements. The company must offer settlements equivalent to what the insured would receive from the courts, both before the litigation process begins and while it is in process. This is particularly true if the initial settlement was so small it prompted the decision to go to court. Paid settlements are required to include an explanation of what the payment covers. Not offering an explanation of a settled claim is just as much an act of bad faith as not explaining a refusal. No matter what the insurance company’s decision is, it needs to be clarified.
If you suspect an insurance company is not acting in good faith after a car accident, truck accident, or motorcycle accident, contact Salyer Law. We understand insurance bad faith cases and are willing to put our expertise at your disposal. Most of our bad faith cases are referred to us by legal professionals, so seek an expert opinion on the subject.