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How Do I File a Bad Faith Insurance Lawsuit?

On Behalf of | Aug 2, 2021 | Firm News

Insurance companies are in the business of making money, and their goal is to collect premiums, which means paying out as little as possible in claims. Individuals have legal recourse against insurance companies that act in bad faith. One of those options is to file a bad faith lawsuit against the insurance company for denying the legitimate claim. Listed below are steps to follow when pursuing a bad faith insurance lawsuit.

Review the Policy

Many insurance policies look similar but contain different language. The terms of the insurance policy will dictate the process. Some insurance policies explicitly exclude certain events. For instance, house damage caused by flooding might be excluded in policies for people who live in low-lying areas.

Anyone filing a claim for flood damage should review their policy before filing a claim. If the policy does not specifically exclude flood damage but a claim is still denied, the person may have a valid claim for bad faith insurance.

Keep All Notes

Depending on the reason for an insurance claim, a person may need to provide substantial evidence to support their claim. Without this evidence, their claim may be denied.

Even with all of this evidence, insurance companies frequently deny claims outright. Keeping photographs, reports, receipts, estimates, and any other relevant documents can paint a picture of the validity of the claim, making it more likely that a claim will be approved.

Document the Denied Claim

Even when people provide a lot of information and evidence to support an insurance claim, the insurance company may still deny the claim. When this happens, it is crucial that a person keeps the notice of denial.

Insurance companies are required to provide a reason for a denial. If they do not, that could be a bad faith denial. Even if a person asks for a subsequent review of their claim, they may still receive a denial. Keeping this documentation will help prove the insurance company is acting in bad faith.

Send a Demand Letter

In most cases, a person will need to show that they tried to resolve the issue before filing a lawsuit. A person can do that by making a final demand for payment of the claim.

In the demand letter, a person will provide support for their claim and their request for payment. Sending this demand letter will trigger a time frame for the insurance company to respond, which is why it is good practice to send this demand letter in the mail using certified mail or another signature and delivery confirmation method. A person cannot file a lawsuit until they have given the insurance company an opportunity to respond to their demand, which is usually no more than 60 days.

File a Complaint

Any person who has filed a claim with an insurance company that has been denied can file a complaint with their state. Most states have a department that regulates insurance companies and handles complaints against insurance companies acting in bad faith.

If a person has not received a response to a demand letter or has only received a denial of their claim, they should contact the relevant state department to complain about the insurance company. Most states will take the complaint and refer it to mediation. While this may seem like a sidestep, it can be a good because it can lead to a resolution of the dispute.

File a Bad Faith Lawsuit

If a person has not been able to resolve the issue up to this point, it may be necessary to file a bad faith lawsuit against the insurance company. Doing this gives a person the chance at recovering under the insurance policy, and they may be able to collect additional compensation for their time and effort, especially if the insurance company is acting in bad faith.

Filing a bad faith lawsuit is no simple task. Insurance companies have large budgets to fight individual lawsuits and will try to overwhelm people with teams of lawyers. However, this should not deter people with legitimate claims of bad faith. People wronged by insurance company bad faith often have the ability to collect additional compensation for fraud, breach of contract, and negligence, among other potential legal options.

What Evidence Do I Need for a Bad Faith Insurance Lawsuit?

To file a bad faith lawsuit against an insurance company, a person will need to compile a lot of evidence to help support their claim. All of this evidence will attempt to prove the insurance company’s bad faith actions, which can take many forms, including:

  • Excessive delay in responding to a claim for coverage
  • Unjustified denial of coverage
  • Lying about what a policy covers
  • Lying about the reason for denial
  • Failing to provide a prompt reason for denial
  • Failing to make a good faith attempt at settling a claim
  • Altering an insurance policy after the fact
  • Rescinding or canceling a policy to avoid paying a claim

Being the victim of a bad faith insurance claim can add frustration and anger to an already stressful situation. No matter the exact reason why an insurance company denied a claim, a person may have legitimate reasons to file a bad faith lawsuit to attempt to collect benefits. Any individual can benefit from working with an experienced bad faith insurance lawyer.

Pittsburgh Bad Faith Insurance Lawyers at AlpernSchubert P.C. Help Clients Navigate the Bad Faith Insurance Lawsuit Process

You pay an insurance company premium on a regular basis, and you expect that when you need their support, they will be there. However, insurance companies do not always act scrupulously and often deny legitimate claims to increase their profits. Speak with the Pittsburgh bad faith insurance lawyers at AlpernSchubert P.C. today to learn more about your legal options. Call us at 412-765-1888 or contact us online to schedule a free consultation. Located in Pittsburgh, we proudly serve clients in Allegheny County, Lawrence County, Washington County, and throughout Western Pennsylvania.