Bad Faith Archives | Scottsdale Personal Injury Blog

7 examples of bad faith in claims handling by insurance companies

2017-09-22T20:00:00Z

Insurers are required by law to handle claims in good faith, which means properly investigating them, negotiating reasonable payouts and settling them in a timely fashion. When insurance companies use dishonest or unfair tactics, they can be held to account in what is called a bad faith insurance action.

Unfortunately, insurers sometimes fail in their duty to act in good faith. If you experience bad faith by an insurance company, you should call a lawyer. But how do you know if a company's actions are in bad faith?

]]> Here are seven examples of how bad faith can occur:

Refusal to pay a valid claim

Although insurance companies are required to use only fair claims practices, they sometimes fail to pay out claims that seem clearly in line with the policy. For example, you suffer an injury that your doctor says will take six months or more to heal. You have long-term disability insurance, but your claim is inexplicably denied.

Failure to conduct a complete investigation

One reason insurance claims are unfairly denied is that the company's investigation was incomplete or handled negligently. Companies are required by law to conduct a thorough investigation promptly.

Misrepresenting the law or policy language

If your legitimate claim was unfairly denied, your next step is to ask for an explanation. At this point, the insurance company might tell you that your policy doesn't cover something that you believe it clearly does. Companies have been known to misrepresent their own policy language or deliberately misinterpret it in their own favor. They may also fail to mention laws that act in your favor.

Deceptive practices

Failing to mention a crucial state law affecting your claim could be deceptive. Other examples include failure to notify you of a deadline, not providing the appropriate paperwork, or concealing the existence of coverage you may be unaware of.

Offering less money than a claim is worth

If they can't deny your claim outright, some insurers may try to lowball it instead. For example, you may have collected several estimates for needed repairs, only to be disconcerted that your insurer's offer is lower than any of them.

Unreasonable delays

If a company delays your payment long enough, it can cost you money. They may be working internally to push your payment into a different quarter or simply to keep earning interest on the money. Meanwhile, you may be forced to tie up your own money by paying out-of-pocket for things insurance should cover.

Making threatening statements

No insurance company employee should ever threaten a policyholder -- or anyone. This includes threats of taking harsh or retaliatory legal action against you.

Jury returns $6.5 million verdict for Adelman German client

2017-09-15T23:56:00Z

In 2012, an Arizona man suffered a traumatic brain injury that made him unable to continue working. Not only did he suffer from physical disabilities, the injury ultimately led to debilitating mental health issues requiring multiple hospitalizations.

He was receiving disability benefits under a policy he had purchased in 1995, when his disability insurance company suddenly stopped making payments, claiming that it saw no evidence of impairment in his medical records. This news -- and his complete loss of benefits -- was financially and emotionally devastating to the man, his wife and their two young daughters.

]]> It was later discovered that the insurance company had not even reviewed eight to nine months of his most recent medical records. Unfortunately, he and his family suffered greatly because of the company's refusal to pay his benefits.

"Evil mind" led to termination of man's benefits

During the ensuing lawsuit, a jury found that the man's disability insurance carrier, Country Life Insurance Company and C.C. Services, Inc. (both doing business as Country Financial), acted with an "evil mind" and a conscious disregard of the harm a denial would cause to the man and his family. It put its own profits ahead of its insureds. Because of the bad faith exhibited by the carrier, the jury awarded:

Past and future disability benefits that he was owed under his policy
Emotional distress and loss of quality of life because of their bad faith denial
$5 million in punitive damages -- punishment that aims to keep an insurer from doing this again to someone else

Sadly, this is not the first time in the past year that this insurance carrier misrepresented the facts of a claim. In a 2016 published opinion, the U.S. District of Arizona entered the most severe sanctions possible against Country Life by striking its answer in a disability insurance bad-faith lawsuit. In that case, Sell v. Country Life, the company and its legal representatives were found to have intentionally withheld and manipulated evidence to create a false narrative and escape culpability. That case was resolved without a trial.

Protecting the rights of workers throughout Arizona

This $6.5 million verdict is extremely important for the rights of insured workers and their families throughout Arizona and the rest of the country. It shows the worst that can happen when an insurance company acts in bad faith and terminates a legitimate disability claim. Hopefully, the outcome of the case sends a message to all disability insurance carriers that this type of behavior will not be tolerated in this state or across the nation.

Read more about this case and other success stories obtained by the law firm of Adelman German on behalf of their clients.

Burglar causes damage but insurance company won't pay

2017-08-14T19:00:00Z

It was a nightmare. Burglars ransacked the home of a single dad and his five kids, who were all under the age of 12. Not only did they steal a lot of personal property, they left the tap running in the bathtub, flooding the family's house.

The homeowner filed a claim with his insurance company, Ameriprise Insurance, requesting $134,000 in repairs for the water damage. Despite providing evidence of his claim -- including a detailed police report of the burglary -- his claim was denied. In fact, Ameriprise, also known as IDS Property and Casualty Co., began investigating him for fraud within a week of the crime.

]]> To make a long story short, the father was forced to file a bad faith claim against Ameriprise in order to get his home fixed, pay for the 14 months he and his children had to live elsewhere and for cleaning up the mold issue that resulted from inadequate repairs. Four years later, a jury awarded the family $1.3 million: $900,000 was in a form of punishment against the insurance company for acting in bad faith and $200,000 for emotional distress suffered by the family.

Will your insurance company be there when you need it?

Unfortunately, this type of bad behavior by insurance companies happens all the time. You have been faithfully paying your premiums assuming that your carrier will protect you in the event of a loss. A denied life insurance claim can leave surviving family members without necessary finances. A denied long-term disability claim can mean you have no way to meet your financial obligations.

If your carrier has denied your insurance claim, learn about your legal options.

Is there such thing as 'good bad faith?'

2017-06-07T18:25:00Z

Bad faith is a phrase used to describe insurance company behavior when they fail to keep the promises in the policies they issue.

In long-term disability insurance for professionals, bad faith takes these forms:

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Refusing to pay benefits

Refusing to conduct a proper investigation of your claim

Delaying payment of benefits

Using deceptive practices

Bad faith is a loaded phrase because it implies that insurance companies are bad and lying to you. In the case of long term disability insurance policies, you have paid a large monthly sum to protect your future against accident and illness. It is infuriating when the insurance company says no. For many professionals, denial is the emotional equivalent of a neutron bomb going off.

So, is there such thing as "good bad faith?"

Not when you're legitimately disabled and your claim is denied.

The best way to think about bad faith is to step back and look coldly at the insurance business. Insurance companies do not really see you, a human being and their paying customer, as their primary constituency. Their primary constituency is their investors, who want good return on investment. Paying you what they promised is, well, bad for business.

If they can say no, reduce your claim or entangle you in their process, that's good for their bottom line. If they can identify any reason not to pay your claim immediately and in full, they will embrace it. What is bad faith to you seems like good business to them.

Never expect long-term disability insurance companies to pay out without thinking long and hard about your case. It's not personal, even though it is intensely personal for you.

The problem of emotion

These cases are emotional, because the policyholder feels betrayed, and at the most vulnerable moment - when they are sick or injured, and their once-bright future has clouded over.

Before you work with a lawyer, chances are you have had angry exchanges, slammed phones and lost sleep wondering how to go forward.

Lawyers are useful in these cases because they take you out of the argument. They dial back the emotion and cast a cold eye on the facts of the case. This benefits both you and the outcome of your case. Let an experienced attorney fight and win this cold war for you.