How to Prove Bad Faith Insurance?

To prove a bad faith insurance claim, you must show how the insurance company acted unreasonably or unfairly in handling your claim. This may include proving how it denied your claim without proper investigation, delayed payments without a valid reason, or offered a too-low settlement.

If you want to build a case showing how an insurance company treated you unfairly, our Raleigh bad faith insurance lawyer can review your legal options and next steps during a free consultation. We can manage your case from start to finish and seek a favorable outcome for you.

What Is Bad Faith Insurance?

Bad faith insurance refers to an insurer‘s dishonest or unfair practices when handling claims. Insurance companies have a legal duty to act in good faith and deal fairly with policyholders, third parties owed damages through another party’s policy, and businesses with commercial insurance policies. 

When they don’t, it is considered bad faith. This means the insurer isn’t fulfilling its duties under the policy, such as processing claims promptly, paying a fair settlement, or properly investigating the claim. 

Common Examples of Actions that May Constitute Bad Faith

Several actions by an insurance company can qualify as bad faith, including:

• Unreasonable delays: The insurer may take too long to respond to a claim or intentionally stall the process without a valid reason.
• Denying a claim without investigation: Insurers must investigate and justify their decisions before denying a claim. If they deny a claim, they must give a valid reason that aligns with the policy terms.
• Failure to give a valid explanation for denial: Insurers must give a clear and specific explanation when denying a claim. The policy’s terms must support the reason for the denial.
• Offering less than the claim is worth: Lowballing a settlement offer, despite clear evidence of the claim’s value, is another way insurers may act in bad faith.
• Misrepresenting a policy’s terms: The insurance company provides incorrect or misleading information about what your policy covers, making it seem like your claim is invalid when it should be covered.

Steps to Take to Prove an Insurer Acted in Bad Faith

Proving an insurance company acted in bad faith requires building a solid case that shows how the insurer mishandled your claim or failed to meet its obligations under your policy. Taking the following steps can help strengthen your case:

Prove You Had a Valid Insurance Claim

First, show that your claim was legitimate and covered under your insurance policy. This involves demonstrating that the event you’re filing a claim for falls within the scope of your coverage and that you meet all the conditions a valid claim requires.

It is important to analyze the exclusions and endorsements in your policy when making a coverage determination. This can be a complex exercise and the bad faith attorneys at Whitley Law Firm are well equipped to analyze your policy along with all the exclusions and endorsements that modify it.

This step also confirms there is no doubt your claim should have been paid according to your policy’s terms. 

Show How the Insurance Company’s Actions Were Unreasonable

Next, highlight the insurance company‘s unreasonable behavior. Examples of bad faith conduct include:

• Delays in processing your claim.
• Denying a valid claim without a reasonable explanation.
• Offering a settlement far below the actual value of your loss. 

These actions show how the insurer failed to act in good faith when handling your claim.

Provide Evidence of Communication Issues With the Insurer

Documenting the poor communication you had with the insurance company is key. Keep detailed records of all your interactions with company representatives, including emails, letters, and phone calls. 

If the insurer ignored your attempts to communicate or failed to explain their decisions, this lack of response can serve as strong evidence that they acted in bad faith.

Document Any Delays or Unfair Practices 

If there were unreasonable delays in the processing or payment of your claim, this could indicate bad faith. Keep a timeline of events, noting when you filed the claim, when you contacted the insurer, and how long they took to respond or act. 

The law requires insurers to handle claims promptly, so excessive delays can help prove bad faith.

Prove the Financial or Emotional Harm You Experienced

Finally, demonstrate how the insurance company’s bad faith caused you harm, whether financially or emotionally. 

This might include extra expenses you had to cover because your claim was wrongfully denied or delayed, as well as the emotional stress or anxiety caused by the insurer’s behavior. Showing this harm helps justify the damages you may be entitled to recover in a bad faith case.

What Are the Legal Requirements for Filing a Bad Faith Claim?

Before you can file a bad faith insurance claim, you must meet certain legal requirements. These requirements can vary by state, but the general principles are similar. Below are the key elements:

•  A valid Insurance policy must exist: You must have an active and valid insurance policy with the insurer you are claiming acted in bad faith. This policy is the contract that sets the terms for how the insurer is supposed to handle your claim.
• You properly filed your claim: You must have filed a valid claim under the terms of your insurance policy. This means providing accurate information, submitting necessary documentation, and following the insurer’s process.
• Evidence of bad faith: You need evidence that the insurer acted unfairly or dishonestly to prove they acted in bad faith. As noted earlier, this could include unreasonably denying a claim and delaying the investigation or payment without a valid reason, among other practices.
• Proving the insurer’s unreasonable conduct: The insurer’s actions must go beyond just making a mistake or being negligent. You must show they acted unreasonably and intentionally to benefit themselves at your expense. 

Courts will consider if the insurer had a valid reason for its actions based on the policy terms. We will review its terms, explain how an insurance adjuster looks at your claim, answer your questions, and advise you on how to proceed with proving your bad faith insurance case.

The Role of a Lawyer in Proving Bad Faith Insurance

Working with our Raleigh personal injury lawyers can help you cover all your legal bases as you aim to prove an insurance company acted in bad faith. 

We can review the laws pertaining to your case, such as North Carolina’s Unfair and Deceptive Trade Practice Act. which aims to protect consumers from unfair or deceptive actions by businesses such as insurance companies.

After we review your case and determine how we can help, we can:

Gathering Evidence for Your Case

A lawyer will collect and review all the relevant documents, including your insurance policy, claim paperwork, and communications with the insurer. They will look for signs of unreasonable conduct, such as unexplained delays or unfair denials.

Negotiating With the Insurance Company

Experienced lawyers understand how insurance companies operate. They can handle all communication and negotiations with the insurer, helping to avoid further delays or unfair practices. If the insurer refuses to act in good faith, the lawyer can push for a fair settlement.

Filing a Lawsuit

If the insurer doesn’t correct their actions, your lawyer can file a bad faith lawsuit. This legal action holds the insurer accountable and may result in compensation for the claim, plus additional damages for the bad faith conduct.

Seeking Fair Compensation

If a bad faith claim is successful, the insurer may be required to pay more than just the original claim amount. A lawyer can help you pursue additional damages, including punitive damages, to punish the insurer for their misconduct.

What Happens After Proving an Insurer Acted in Bad Faith?

Once you prove that an insurer acted in bad faith, several outcomes may occur:

You May Receive Payment of the Original Claim

 If the insurer is ordered to pay the original amount owed on the claim, this resolves the issue by providing the compensation you were initially entitled to under the policy.

Additional Damages May Be Awarded

In many cases, the court may award additional compensation beyond the original claim amount. This can include:

• Compensatory damages: To cover any financial losses you experienced due to the insurer’s actions.
• Punitive damages: These are meant to punish the insurer for their dishonest or unfair practices and deter them from doing it again. A court rarely awards these damages, but you can talk with an attorney about whether they are available.

The Insurance Company May Take Corrective Actions

Sometimes, the court may order the insurer to change its business practices or take corrective action to ensure it doesn’t engage in bad faith again. This could involve policy changes, employee training, or closer monitoring of their claims handling.

Contact Us Today to Learn How to Prove Bad Faith Insurance

Whitley Law Firm has decades of experience helping North Carolinians who have suffered losses due to another’s negligent conduct. If you’re dealing with an insurance company that isn’t treating you fairly and want to understand how to prove bad faith insurance, we can help. 

We represent property owners, businesses, families, and individuals in cases involving bad faith insurance practices, so we can lead your fight for your financial recovery. Contact our legal team today for a free consultation to discuss your options and how to protect your rights.