Insurance Law: Insurance Bad Faith Claims

In August 2005, the nation watched wide-eyed and in horror as New Orleans, coastal Mississippi, and much of the north-central Gulf Coast were battered by Hurricane Katrina. In its aftermath, residents of the areas seeking to recover damage for their demolished homes were further victimized when their insurers refused to pay. Since then, hundreds of homeowners have taken their insurance companies to court and have often won. In April 2007, for example, Nationwide Mutual Insurance Company agreed to settle out of court for an undisclosed amount with more than 200 residents of Mississippi’s Gulf Coast. Earlier in the year, State Farm Insurance Company also negotiated a settlement, agreeing to pay about $80 million to about 640 policyholders.

Nationwide, State Farm, and many other insurance companies denied coverage and underpaid claims in large numbers of cases. The reason for their actions is simple: the fewer claims they pay out, the more money they make. While in some cases insurance companies are entitled to dispute an insurance policy’s coverage, in many cases these companies did not treat their policyholders fairly.

What Happens When Your Claim Is Denied?

You know in your gut what good faith is. Did you know that good faith is also a legal requirement in the state of North Carolina? State law establishes an expectation that insurers will fairly review and pay claims. State law also, prohibits insurance companies from engaging in unfair insurance claims practices, by statute.  Put another way, the law basically assumes that your insurance company is full of good guys sitting in their offices looking for ways to pay your claim rather than deny it. An insurance company that doesn’t do so is acting illegally and in bad faith. That goes for insurers of all types: auto, individual or group health, HMOs, homeowners, life, business, fire, and short- or long-term disability.

Proving Bad Faith

But there’s a catch. While pointing fingers is easy, legally proving bad faith is slippery. Insurer's don't have to be perfect. Thus, it’s vital to find a knowledgeable lawyer as soon as you suspect your insurance company is acting badly, which may include these actions or others:

• Is your insurance company being unresponsive? Not returning phone calls?
• Do you feel like you’re being forced to jump through unnecessary hoops?
• Has the delay of your claim put you on the verge of bankruptcy or foreclosure?
• Do you sense that the insurance company hasn’t fully investigated your case?
• Do you disagree with “facts” cited in the insurance company’s evaluations of your case?
• Is the coverage you’re being offered different than what you thought you had?

Even when the answer to these questions is “yes,” few policyholders fight back because they are intimidated by lawyers, frightened by the potential costs of a lawsuit, or just plain scared of going head-to-head with a large company. That’s exactly what your insurance company may be counting on if it is acting in bad faith.

Learn Your Options-Contact Us Today

Don’t play into their hands. To learn your rights, call or email my firm today, The Law Offices of Thomas Waitt Pleasant, PLLC. I can help you receive a fair settlement, and I provide free initial consultations for insurance bad faith cases. Fees are not a worry because they are paid when and if you win your case.

You may have no choice but to take your insurer to court. You’ll need all the help you can get to prove that your insurance company disregarded its duties investigating and paying your claim. To fight an insurance company requires special knowledge, skill and experience. Please contact me today.

Please spend some time at my web site to learn more about insurance and your rights. Additional information about bad faith practices is available from North Carolina’s Department of Insurance and from the nonprofit group Fight Bad Faith Insurance Companies. Also, you might check out another consumer organization helping consumers like you, www.unitedpolicyholders.org fight bad insurance company practices. The nonprofit group Fight Bad Faith Insurance Companies ranks 100 insurance companies’ records on paying claims. You can find lots of useful information at the website for the National Association of Insurance Commissioners, at www.naic.org.

Library for Insurance Law: Insurance Bad Faith Claims:

• Insurers Increase Profits to Record Levels by Overpricing Policies and Shifting Costs to Consumers and Taxpayers (Report & Press Release from Consumer Federation of America) [PDF]   
  Description: Consumer Federation of America report on insurance practices. Every insurance lawyer should read this report. Every person looking for an insurance claim lawyer should read this report. Despite record profits, insurance companies still seem to engage in unfair insurance claims practices and insurance bad faith when people have an insurance claim, forcing people to hire an insurance lawyer. The Law Offices of Thomas Waitt Pleasant can help you with your insurance law or insurance claim dispute or problem.
• Order Denying Allstate Insurance's Motion to Seal Trial Exhibits [PDF]   
  Description: On August 16, United States District Judge Sarah Vance in New Orleans refused to seal the trial exhibits in Weiss v. Allstate, the case of a New Orleans couple who earlier this year won a $2.8 million verdict against Allstate for illegally refusing a hurricane-related claim. In so ruling, the Court noted that "[p]ublic access serves to enhance the transparency and trustworthiness of the judicial process, to curb judicial abuses, and to allow the public to understand the judicial system better." This is a copy of the order.
• Consumer Federation's Allstate Insurance Anti-Consumer Study [PDF]   
  Description: 35 page report by the Consumer Federation of America regarding Allstate Insurance Company's Excessive Prices and Poor Claims Practices
• National Association of Insurance Commissioners   
  Description: Home page for the primary association of insurance commissioners, the state regulators who control and police the insurance industry. Here you can find information that could help with your bad faith insurance or unfair insurance claim practices case; like insurance complaint statistics, information on specific insurance companies, and other useful information about your insurance policy or insurance claim.
• State Farm v. Campbell (Excerpt): Why a Judge Found State Farm Cheated Customers For Over Two Decades (Unfair Insurance Claims Practices / Bad Faith) [PDF]   
  Description: This excerpt details unfair claims practices and bad faith insurance conduct. A Utah trial court judge found that State Farm had repeatedly and "deliberately deceived and cheated its customers." by setting monthly payment caps and individually rewarding those insurance adjusters who paid less than the market value for claims. The judge found that even "[a]gents changed the contents of files, lied to customers, and committed other dishonest and fraudulent acts in order to meet financial goals."
• Disability Insurance Market Conduct Investigation Report: Unum Provident and Paul Revere (Unfair Insurance Claims Practices / Bad Faith) [PDF]   
  Description: This is a copy of a Targeted Multistate Market Conduct Examination (investigation) of companies controlled by or related to disability insurer UnumProvident, including Unum Life Insurance Company, Paul Revere Life Insurance Company, and Provident Life and Accident Insurance Company. The insurance commissioners determined that these insurance companies had essentially used unfair claims practices and bad faith in the administration of disability insurance claims.

Frequent Questions for Insurance Law: Insurance Bad Faith Claims:

• What is insurance bad faith?
• What kind of bad faith insurance claims are there?
• What rights am I granted under the insurance policy?

Web Resources for Insurance Law: Insurance Bad Faith Claims:

• NAIC (National Association of Insurance Commissioners)

  Description: The mission of the NAIC is to assist state insurance regulators, individually and collectively, in serving the public interest and achieving the following fundamental insurance regulatory goals in a responsive, efficient and cost effective manner, consistent with the wishes of its members: Protect the public interest; Promote competitive markets; Facilitate the fair and equitable treatment of insurance consumers; Promote the reliability, solvency and financial solidity of insurance institutions; and Support and improve state regulation of insurance.

• Allstate Insurance Online

  Description: Consumer site containing discussion, complaints of bad faith and unfair claims practices, as well as other interesting information about Allstate Insurance.

• North Carolina Department of Insurance
• BadFaithInsurance.org

  Description: Site with comprehensive information about insurance companies, unfair insurance claims practices, and insurance bad faith.

• UnitedPolicyholders.org

  Description: United Policyholders is a non-profit charity helping insurance consumers. The organization publishes reliable, free buying tips and practical insurance claim advice. The organization also advocates for consumers in the political realm. United Policyholders is a sound resource for information about insurance bad faith and unfair insurance claims issues.

• Policy Holders of America

  Description: This website has information to assist people with insurance claims, including where an insurance company has engaged in unfair claims settlement practices, bad faith insurance practices, and other issues involving insurance claims disputes.

The Law Offices of Thomas Waitt Pleasant, PLLC
427 Franklin Street
Fayetteville, NC 28301

Toll Free: 888-HELP-156
Phone: (910) 323-3250