When you pay insurance premiums faithfully, you expect your insurance company to pay any claims against you. However, that doesn’t always happen. In some cases, an insurance company may deny a claim or pay so little that the payments do not cover medical expenses, exposing you to a lawsuit. If the insurance company had an obligation to pay the claim and didn’t, you might need a bad faith insurance lawyer to help you recover the compensation you deserve.
What Is a Bad Faith Claim?
Just because an insurance company denies a claim doesn’t mean it acts in bad faith. An insurance policy is a contract between you and the insurance company. The policy includes coverage you pay for in addition to exceptions. As long as you pay the premiums, the insurance company should pay any claims against it, whether filed by you or a third party.
If an insurance company does not pay a claim that it covers, delays paying the claim, or pays less than it should, it opens itself up to a bad claim lawsuit.
Some of the reasons you might have a bad faith claim include the following:
- Payment delays. The insurance company should pay for an incident but uses tactics to avoid paying the claim.
- Unexpectedly canceling policies. If you erred when completing the paperwork related to the insurance policy or the policy contains a minor error you failed to notice before signing the policy, the insurance company could use those errors to cancel the policy. This is common with life insurance policies. The insured paid all the premiums but made an insignificant error. When it’s time to pay when the insured dies, the insurance company uses this error to deny payment.
- Denies payment without investigating the claim. If the insurance company denied a claim without investigating it, you could have a bad faith claim. Insurance companies need to investigate claims to determine whether they are good and then pay promptly if the claim is good.
- The insurance company pays less than you deserve. If an insurance company tries to avoid paying the full amount you deserve for your losses, it might be acting in bad faith. For example, if your damages are $50,000 and the insurance company only pays $10,000, it is not covering all of the losses it agreed to cover in the policy.
- Policy exclusions. Every policy has exclusions, but if the insurance company excludes payment and states that it is an exclusion when it is not, the insurance company acts in bad faith.
Other ways an insurance company could act in bad faith include:
- Failing to investigate the claim on time. Evidence often disappears, whether purposely or inadvertently. For example, in a car accident claim, the police might impound the vehicle, and the weather could deteriorate the evidence. In an icy sidewalk slip-and-fall claim, the ice could have melted long before the insurance company investigated the claim.
- Delays any or all stages of the claims process.
- Failing to settle third-party claims.
- Misinterpret insurance policies.
- Miscommunication of policy requirements.
- Attempting to cancel a policy after you file a claim.
- Filling out extensive paperwork.
- Failing to point out and explain policy limitations before the insured signs the contract for the policy.
Types of Bad Faith Claims
You probably have at least one type of insurance, if not more. Health insurance, life insurance, homeowner’s insurance, auto insurance, and rental insurance are just a few of the insurance policies people have.
You might also have to deal with other insurance companies, such as medical malpractice insurance and business insurance.
- Disability insurance. Some people might have insurance to cover disabilities. If the insurance denies a disability claim or pays less than it should, and an exception didn’t cause your disability, you might need a bad faith insurance lawyer.
- ERISA (Employee Retirement Income Security Act) Claims. If you have a disability or life insurance through your employer, ERISA most likely covers it. If the insurance through your employer fails to cover or pay the full amount of a claim, you might need a bad faith attorney. You have a very short time to file a bad faith claim if ERISA governs your insurance policy. You should contact a bad faith insurance lawyer immediately after a denial or if you believe the insurance company offers less than you deserve.
- Auto insurance. When an auto insurance company denies a claim, it puts a heavy financial burden on you as a policyholder. The plaintiff could sue you personally. Always make sure you understand what your auto insurance policy covers, and never take just the minimum coverage.
Part of your auto insurance policy is personal injury protection (PIP) insurance. States that have no-fault insurance require PIP insurance. It covers medical expenses, economic losses, and essential services.
Your insurance policy might also have a separate rider for uninsured/underinsured people. You should also have that coverage, as it covers you if someone without insurance or who doesn’t have enough insurance causes injuries and other damages.
Types of Injuries
In addition to other damages, insurance companies cover medical expenses for injuries you suffered due to another person’s or entity’s negligence. Injuries vary from one type of accident to another, and many cause long-term or permanent disabilities.
These severe injuries could cost an insurance company millions and an insurance company will likely try to get out of paying for them.
- Cuts, scrapes, bumps, scratches, and bruises. These can happen in any type of accident, including slip and fall accidents, vehicle accidents, medical malpractice incidents, nursing home incidents, and more. While these injuries might seem minor initially, infections can enter open wounds. If you have an autoimmune deficiency, the infection could resist treatment and turn gangrenous. Bumps and bruises could develop hematomas and cause additional medical expenses, pain and suffering.
- Strains and sprains. These injuries generally heal within six weeks without surgery. However, some could be more serious and require additional medical attention. You might sustain strains and sprains in many types of accidents, including but not limited to vehicle accidents, slip and fall accidents, dog bites, and more.
- Pulled and torn muscles and other soft tissue injuries. Pulled muscles might heal with therapy, but torn muscles sometimes require surgery to repair. Other soft tissue injuries, such as pulled ligaments, could heal with therapy and rest but could also require surgery.
- Simple and compound fractures. Fractures can take six to eight weeks or more to heal. Sometimes, complications happen, and it takes longer. The insurance would pay for all medical expenses related to the initial injury and any complications caused by the initial break.
- Chemical and thermal burns. You could suffer burns in car accidents, fires, and chemical accidents. Burns range from first to third-degree, with third-degree being the worst. Depending on the coverage of the burn, you could be in a burn unit for quite a long time or require extensive care throughout the recovery process.
- Internal injuries. Vehicle accidents, slip and fall accidents, medical errors, and other accidents could cause internal injuries. Internal injuries often refer to damage to the internal organs but could be damaged blood veins and arteries or might refer to a surgeon leaving a foreign object inside a surgical wound.
- Traumatic brain injuries. Vehicle accidents, slip and fall accidents, medical errors, dog attacks, and other types of accidents could cause traumatic brain injuries if you bump your head or have oxygen deprivation. These injuries could be closed, such as a concussion, or open, such as a bullet penetrating the skull. Traumatic brain injuries could cause long-term or permanent disabilities that require medical care and therapy for the rest of your life and could prevent you from working.
- Head, neck, and shoulder injuries. These types of injuries are most common in vehicle accidents and slip and fall accidents. Depending on the type of injury, it could last days, weeks, months, or even years.
- Back and spinal cord injuries. Vehicle accidents, slip and fall accidents, dog bite/attack accidents, medical errors, nursing home accidents, and other types of accidents could cause back and spinal cord injuries. These injuries could cause partial or full paralysis, which could prevent you from working or having a fulfilling relationship with your family.
Insurance companies pay more than medical expenses when you suffer injuries and long-term or permanent disabilities because of another person’s or entity’s negligence. You could recover compensatory damages, which include economic damages and non-economic damages.
Sometimes referred to as special damages, economic damages have a monetary value.
Most people who suffer injuries because of another’s negligence recover compensation to cover economic damages, including:
- Medical expenses. Doctors’ appointments, surgeries, follow-up appointments, prescriptions, ambulatory aids, physical therapy, occupational therapy, cognitive therapy, psychological therapy, home health care, nursing home care, and rehabilitative home care. Medical expenses also include hand controls for your vehicle and accessibility upgrades to your home, such as wheelchair ramps, widened doorways, handrails, and grab bars.
- Income. You could recover lost wages for the lost money between the accident and your settlement or trial award. You could also recover compensation for loss of earning capacity if your injuries cause long-term or permanent disabilities.
- Personal property. In some accidents, such as vehicle accidents, you could recover compensation for damage or the destruction of personal property, including your vehicle.
- Death-related expenses. If you lose a loved one because of another’s negligence, the insurance companies could pay for burial and funeral expenses, cremation expenses, and probate court attorney’s fees and costs.
Sometimes referred to as general damages, non-economic damages do not have a monetary value. Not everyone who suffers injuries can recover non-economic damages. In most cases, only those who suffer long-term or permanent disabilities caused by accident injuries or those who lost a loved one recover non-economic damages.
Non-economic damages include:
- Pain and suffering, including emotional distress.
- Loss of quality of life if you have to make lifelong changes, such as using ambulatory aids or taking prescriptions.
- Loss of companionship if you can no longer enjoy time with your family or attend family activities and events.
- Loss of consortium if you can no longer enjoy a physical relationship with your spouse.
- Amputation of a digit or limb.
- Loss of use of a body part such as a foot or arm.
- Loss of use of a bodily function such as your eyesight, hearing, or bladder.
- Inconvenience if you have to hire someone to do the chores you usually do, including but not limited to house cleaning, grocery shopping, lawn maintenance, and home repair and maintenance.
- Excessive scarring and/or disfigurement.
If you suffered injuries or lost a loved one in an accident and believe the insurance company wrongly denied your claim or offered you less compensation than you deserve, contact a personal injury lawyer in New York as soon as possible.