How To File a Bad-Faith Lawsuit Against An Insurance Company
Updated: Jul 27
By now, it is no secret that Florida is a hotspot for vehicular crashes. These mostly car accidents cost Florida around $10 billion annually. And, as if that were not bad enough, sometimes insurance companies flat-out refuse to pay claims after an accident.
Typically, when an insurer refuses to pay, it uses so-called bad faith tactics. If your insurance provider does this when you try to claim after a car accident, you can file legal action against the company.
Depending on the insurer's tactics, you may be able to sue for breach of contract or initiate a tort case based on bad faith.
Bad Faith Tactics to Look Out For
Your insurer may pay you when you file a claim after an accident. Or, they may come up with several reasons not to.
For example, the insurance company may unlawfully drag its heels when investigating your claim. Insurers mainly do this hoping that clients will eventually give up on their claims.
In Florida, the maximum timeframe for accepting or denying a claim is 120 days from the accident date. If your insurance provider exceeds this timeframe without giving you an answer, or if they deny your claim anyway, you may have grounds to sue the company.
Your insurer may also fail to inform you of the correct claim filing deadlines related to your situation. If you miss the deadline, the insurer will deny the claim.
Even if your claim is completely valid, your insurance company may still try to find a way to get out of paying it. Since it cannot refuse a valid claim, it may offer you far less money than what your claim is worth. This is also seen as an act of bad faith.
Sometimes, an insurance company goes completely off the rails and makes threatening statements. Contact a lawyer immediately if you notice anything threatening in your insurer’s communication with you, whether telephonically or via email.
The Contrast of Good Faith
Whenever a contract is signed, there is always an understanding of fair practices and good faith. The same goes for the contract you sign with your insurer. You enter your insurance coverage contract assuming that insurers will conduct themselves lawfully once you need their services.
After all, an insurance contract is as binding as any other legal agreement. While signing the contract means you cannot submit a fraudulent claim, it also means that the insurer must follow their regulations and investigate your rightful claim properly.
Good faith agreements also mean an insurance provider must pay your damages or settlement if your policy covers it. They must also settle your claim if it is reasonable and protect you from more losses that may be incurred via a lawsuit.
However, you should consider legal steps when bad faith tactics become evident. An experienced lawyer can help you build a case.
What To Do Before Filing a Bad Faith Lawsuit
If your lawyer finds that you have reason to file a bad faith lawsuit against your insurance provider, there are several steps you must take.
The first thing to do is review your insurance contract. Your lawyer can help you do this to ensure that the contract terms were, in fact, violated. The most important part of the review process is to check and confirm that your claim is covered under your specific policy.
If your insurance provider does not want to settle your claim, it will look for ways to prevent you from filing a valid claim. You, on the other hand, must do everything you can to prove your claim is valid and must be settled.
This means gathering all the required evidence, including reports, receipts, and estimates. You must also keep a record of all communication with your insurance company, including all conversations with the insurance adjuster.
Before you present any of this evidence, ask that someone in an authoritative position at the insurance company review your claim and why it was denied. Asking the insurer for a review also allows it to reconsider settling your claim. You can appeal to Florida’s insurance regulatory agency if your claim remains denied.
If you want to file a lawsuit instead, you will have proof that you tried to remedy the matter by asking for a review and appealing to the regulatory agency.
Ask your lawyer to draw up a demand letter in writing detailing your claim. If this letter is sent via email, it is crucial to ensure that the insurance agency receives it.
Call them to follow up or ask your lawyer to do it. From the date your insurance provider receives your demand, they have up to 60 days to settle it. This process is essentially a ‘final demand’ before filing a lawsuit.
Filing a Bad Faith Lawsuit
Your lawyer will determine the appropriate court when you finally initiate a lawsuit. They will draft a complaint outlining the facts of your case. This complaint will include an overview of the insurance company’s bad faith actions and the damages you seek.
You will then pay the court filing fees, and a summons will be served to the insurance company. What follows is a process of discovery and requests for additional documents. There will be legal arguments on both sides, and the court may order mediation to resolve the dispute and prevent the case from going to trial.
If the case goes to trial, both sides will present evidence, and the outcome will be decided by either a jury or a judge. Remember that the court may rule in favor of you or the insurance company.
If the court finds that the insurance provider acted in bad faith, you will be awarded damages that cover your losses and emotional distress. Sometimes, a court may even award punitive damages, though such cases are rare.
Should the court decide that the insurance company acted reasonably, your case will be dismissed.
It Is Possible to Win a Bad Faith Lawsuit
Hiring an experienced lawyer gives you a far better chance of winning a bad-faith lawsuit. And, if your lawyer advises you to go the mediation route, you may not even have to file a legal case at all.
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