You can sue an insurance company for bad faith when, among other things, the insurer unreasonably denied or delayed your claim without a valid reason. Bad faith claims arise when insurance companies fail to uphold their end of the policy agreement, acting unfairly toward the very people they have a duty to protect.
If you believe an insurer is acting dishonestly or unfairly, you have the right to hold them accountable. You can learn more about your legal options with our Raleigh bad faith insurance lawyer during a free consultation.
What does ‘Bad Faith’ Mean?
The term “bad faith” refers to dishonest or unfair actions by an insurance company when they unreasonably deny, delay, or mishandle a legitimate claim. Insurance companies can act in bad faith in various ways, including the following:
- Unreasonable denial of a claim: The insurer denies your claim without a valid reason or explanation, even when you’ve provided all the documentation and proof you need to prove it.
- Delaying payment for a claim: The insurance company unnecessarily delays processing or paying your claim, hoping that you will give up or settle for less.
- Failing to investigate a claim properly: The insurer doesn’t conduct a thorough investigation or overlooks key details that support your claim.
- Offering a low settlement: The insurer offers a settlement amount that is significantly less than what your claim is worth, knowing that it is unfair.
- Misrepresenting policy terms: The insurance company intentionally misleads you about the terms of your policy or the coverage you’re entitled to receive.
- Making threatening statements or warnings: The insurer uses intimidating language or tactics to pressure you into accepting a low settlement or dropping your claim.
Bad Faith Claims Go Beyond Failing to Meet the Terms of Your Policy
A bad faith claim is more serious than a breach of contract claim. While a breach of contract involves an insurer failing to meet the terms of your policy, a bad faith claim focuses on the insurer’s dishonest or unreasonable behavior.
For example, an insurance company that fails to pay a valid claim may just be breaching the contract, but if it denies the claim without any legitimate reason or engages in deceptive practices, it becomes a bad faith issue.
Bad faith claims involve an element of intentional wrongdoing, such as delaying payments or misrepresenting policy terms to avoid paying what is owed. Because bad faith claims involve more severe actions, they can lead to additional compensation.
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The Legal Process for Filing a Bad Faith Lawsuit
Filing a bad faith lawsuit against an insurance company involves several key steps. First, your lawyer will typically send a demand letter to the insurer, outlining the wrongful actions and requesting a fair resolution.
This letter gives the insurance company an opportunity to correct its behavior before the lawyer files a lawsuit. If the insurer refuses to settle or continues to act in bad faith, the next step is to file a formal complaint in court.
What Happens After You File a Lawsuit?
Once a lawsuit is filed on your behalf, both sides enter a phase called discovery, where evidence is exchanged, and depositions may be taken. If you pursue this process, this is when your lawyer will gather all necessary documentation and expert testimony to strengthen your case.
The parties will then engage in court-ordered mediation and attempt to settle the case with the help of a neutral, third-party attorney acting as the mediator. If no settlement is reached during this phase, your case will go to trial, where a jury will decide the outcome. Throughout the process, your lawyer will handle all legal steps and negotiations to ensure your case is as strong as possible.
Evidence Needed to Prove Bad Faith
To prove a bad faith claim, you must present evidence showing how the insurance company acted dishonestly or unfairly. Key evidence includes the following:
- Communication records: Emails, letters, or phone call logs that show how the insurer communicated with you, especially if there were delays, unresponsiveness, or misleading statements.
- Claim documentation: Copies of your original claim, any supporting documents (medical bills, repair estimates, etc.), and the insurer’s responses to show whether they acted reasonably or ignored important information.
- Policy Documents: A copy of your insurance policy together with all exclusions and endorsements.
- Denial letters or low settlement offers: Written proof that the insurance company denied your claim without a valid reason or offered an unreasonably low settlement.
- Estimates: Any estimate for repairs or replacement whether obtained by you, or by the insurance company.
- Expert opinions: Statements from professionals, like contractors or repair specialists, that counter the insurer’s reasons for denial or low offers.
- Timeline of events: A detailed timeline showing delays, such as how long the insurer took to investigate, respond, or make decisions about your claim.
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Time Limits for Filing a Bad Faith Claim
Every state’s statute of limitations sets a time limit for filing a bad faith insurance claim. This means you have a limited time from the date the insurance company acted in bad faith to take legal action.
In North Carolina, the statute of limitations for filing a bad faith insurance claim is three years from the date of loss, per state law. This means you have three years from the date the insurance company acted in bad faith to file a lawsuit.
The clock starts running when the action occurs, not when you originally purchased the insurance policy.
Why You Should Act Now if Pursuing Legal Action Against an Insurer
Missing this deadline can prevent you from pursuing a bad faith claim against an insurance company, no matter how strong your case may be. You should act promptly and consult with a lawyer who can file your case within the required time frame.
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How Our Lawyers Can Help You Sue an Insurer for Bad Faith
Bad faith claims can affect anyone with an insurance policy who relies on an insurer to handle claims fairly. This includes:
- Policyholders, such as individuals or businesses, that have bought insurance coverage, such as auto, homeowners, health, or life insurance.
- Third-party claimants entitled to compensation through another party’s insurance, such as someone injured in a car accident caused by an insured driver.
- Businesses or companies with commercial insurance policies that experience bad faith actions that affect their operations and financial well-being.
What a Lawyer Can Do to Help Your Case
Our Raleigh personal injury lawyers are experienced in handling bad faith insurance claims and can help you gather the necessary evidence to prove your insurer acted in bad faith. This may include showing:
- The insurance company ignored information that is critical to your claim.
- The insurance company made unreasonable demands.
- The insurance company failed to communicate properly during the claims process.
We can review your policy, explain how an insurance adjuster looks at your claim, and guide you through the legal procedures we must complete to file a lawsuit and meet all deadlines. Additionally, our firm can represent you in negotiations and, if necessary, in court.
We will fight to recover the compensation you’re owed, including any damages related to the bad faith actions. By having legal support, insurance companies are more likely to take your claim seriously when you have an experienced lawyer by your side.
What Damages Can You Recover in a Bad Faith Claim?
You may be able to recover several types of damages depending on the insurer’s actions and the harm caused. These damages may include:
- The value of your original claim: You can recover the amount you were entitled to under your insurance policy that the insurer wrongfully denied or delayed.
- Emotional distress: If the insurer’s bad faith actions caused you unnecessary stress, anxiety, or hardship, you might be able to seek compensation for your emotional suffering.
- Attorney’s fees and legal costs: Many bad faith claims allow for the recovery of attorney fees and court costs, helping you avoid paying out of your pocket for taking legal action against the insurance company.
Can You Get Punitive Damages in a Bad Faith Case?
In cases where the insurer’s actions were especially reckless or malicious, the court may award punitive damages. It is important to note, however, that courts rarely award these damages.
When a court awards them, it wants to punish the insurer and send a strong message, both to the company involved and the industry as a whole, to discourage future bad faith behavior.
These damages go beyond simply compensating the victim—they are intended to hold insurers accountable for unethical practices.
North Carolina’s Unfair and Deceptive Trade Practice Act
North Carolina’s Unfair and Deceptive Trade Practice Act protects consumers from unfair or deceptive actions by businesses, including insurance companies. In a bad faith insurance case, a lawyer can use the act to hold the insurer accountable for acting dishonestly or unreasonably.
If our lawyer proves the insurance company violated the act, the court could award triple the damages (also known as treble damages) and cover attorney’s fees.
We can explain how the law gives added protection and financial recovery options for those who have experienced bad faith insurance practices.
Get Legal Help With Suing an Insurance Company for Bad Faith
You have rights when dealing with insurance companies, and Whitley Law Firm will protect them and fight for your financial recovery. If you wish to sue an insurance company for bad faith, our lawyers can explain how you could go about handling your case during a free consultation.
By pursuing a bad faith claim, you can hold the insurance company accountable for their unfair practices and recover the compensation you deserve. We can help. Call us to get started.
Call (800)785-5000 or complete a Free Case Evaluation form