Insurance Disputes: Home, Automobile and Life Insurance

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When accidents occur and people are injured or property is damaged, insurance companies know exactly what the policy does and does not cover and they usually know exactly what they are legally bound to pay out.  

Unfortunately, these companies sometimes act unscrupulously after claims are filed to minimize or even completely avoid payouts. Insurance adjusters and their lawyers may not deliver you the compensation you are entitled to.  Generally, people should be able to trust their insurance company to act in “good faith.” In other words, there is a reasonable assumption that an insurance company should act fairly towards its policyholders and to those that their policy holders are liable, and should abstain from using deceptive practices against them.  Policyholders do have an option.

Alabama recognizes a tort of insurance bad faith. A policyholder can bring a breach of contract, or bad faith claim when an insurer wrongfully denies a claim against the policy. Specifically, a plaintiff must prove the existence of an insurance contract between the plaintiff and the defendant, the defendant’s breach of the contract, a refusal to pay a claim, a lack of any reasonable or arguable grounds for the refusal, and the insurer’s actual knowledge that there is no reasonable basis to deny the claim. 

An insurer may be able to defend itself on the grounds that there was a lawful basis for denial.  Generally,  when there is a lawful or reasonable basis for a denial, the insurer usually cannot be liable for bad faith.

Bad faith cases can come in many forms, the below are examples of some:  

· when an insurer recklessly or intentionally fails to investigate a claim 

· when an insurer recklessly or intentionally fails to evaluate or “adjust” a claim

·  when the insurer develops a debatable or suspicious reason to deny a claim 

· or when an insurer relies on ambiguous language in the policy it created as a basis for denial

Under Alabama law, both compensatory damages and punitive damages may be recovered in a bad faith action, if the evidence warrants. 

If you have been denied an insurance claim and subjected to loss for what you believe is less than honest clear cut reason, contact us for a free, no obligation consultation.