Good Faith, Bad Faith
The idea behind the “good faith” policy in regards to insurance is that, while insurance is a business, insurers should at least be doing something to look after their policyholders. Insurance isn’t about filling a corporation’s bottomless money pit, after all, it’s paying a company so that the company will pay you in a time of need. If an insurance company forgets this fact or refuses to acknowledge it, it’s acting in bad faith.
When Does An Adjuster Cross The Line?
There are several different ways an insurer can wind up acting in bad faith, but for the most part it comes down to a lack of communication and a refusal to act within the time limits set by government statutes.
The most classic example is likely the insultingly low settlement which the adjuster hands to you without any explanation or attempt at negotiation. Another bad faith action is arbitrarily withholding payment on a claim without any given reason, as is refusing to investigate a claim or else refusing to investigate every conflicting account related to a given claim. If your insurer refuses to get to the bottom of a situation, they’re very likely acting in bad faith.
So What Can I Do?
You should always be careful about accusing an insurance company of acting in bad faith. Most adjusters know exactly where the line between good faith and bad faith is, and they’ll skirt the line so closely that it becomes hard to prove that they’re actively working against your best interest. On top of that, an accusation of bad faith is nothing short of a threat to sue, an action that will win you no friends in a hurry. As such, you should be reasonably certain that “bad faith” is the best possible explanation for what’s going on.
Still, you do need to deliver this accusation before you actually sue them. According to Florida law, you need to have an actual settlement estimate and you must give the insurer 60 days written notice so that they have the chance to make things right before you go to court. If the company proves too stubborn to settle, however, you could potentially receive punitive damages and attorney fees on top of the original settlement.
In Florida courts, punitive damages cap out at $500,000 or three times the estimated settlement, whichever is higher, but other states aren’t as restrictive. A bad faith case in Pennsylvania awarded $22 million to the plaintiff, or almost 100 times his original claim of $250,000.
Bad faith insurance cases are something like a sledgehammer when it comes to dealing with insurers: it isn’t subtle and it’s easy to miss, but when it does hit it can deal a lot of damage. As such, you need to be very careful about when you decide to bring it out.