Protecting yourself from insurance “bad faith”

By Dean I Weitzman, Esq. on February 18th, 2011

We’ve been trained as consumers to believe that if we’re injured in a vehicle accident, our insurance company – the one that’s been collecting all of our costly premiums for coverage – will be there to help us in our hour of need.

Sadly, though, it doesn’t always work out that way.

Sometimes, it turns out that a driver’s biggest nightmare after an accident begins when they have to sue their own insurance company to receive the benefits that they rightfully deserve.

That’s what happened to a driver in western Pennsylvania who was injured in a head-on vehicle crash caused by an uninsured motorist back in 2001.  The accident occurred in Erie County when an uninsured driver ran a red light at an intersection and struck the woman’s vehicle.

So how did this driver’s nightmare legal battle arise?

Well, her insurance company delayed the resolution of the case for all these years after the accident, arguing that her policy didn’t fully cover her.

Instead of coming to her aid and paying the woman’s claims – their own customer’s claims – the insurance company battled her through the legal system, perhaps hoping to stall and delay until the woman would give up her legal fight.

That kind of behavior is called “bad faith.”  That’s a legal term to describe what occurs when a company doesn’t fulfill its contract requirements when called upon to do so.  In the case of an insurance company, an insurer  contracts with a customer through the filing and underwriting of a policy and promises to handle any claims in certain ways, with specific benefits, payments and processes.  If those promises aren’t adhered to and if the company tries to deceive a customer in order to avoid paying legitimate claims, then they are acting in bad faith.  A lawsuit can then be brought against an insurance company for bad faith in handling a claim.

In the case of the woman in western Pennsylvania, her insurance company may have thought that she’d give up on her case and that they’d prevail eventually, but that didn’t happen.

Instead, the case dragged on and a state court recently ruled in the woman’s favor, finding that the insurance company’s mishandling of her claims was unfair, according to a story in The Legal Intelligencer.

In his ruling for the plaintiff, the senior U.S. District Court judge in the case “found that the insurer’s conduct in its mishandling of an uninsured motorist claim was ‘intentional and unreasonable,'” the story said.

Due to the insurance company’s horrific behavior in the case, the judge immediately ruled in her favor and granted summary judgment in her behalf, rather than sending the case to trial, the story said.  Her lawsuit charged her insurance company with bad faith and breach of contract in mishandling her claims.

In his decision, the judge ruled that the insurer misrepresented her $100,000 uninsured motorists’ policy coverage limits and refused to follow its own rules to properly arbitrate the case when the two sides couldn’t agree on what to do, the story said.  The judge also ruled that the insurance company made “unreasonably low settlement offers” and delayed claims payments to try to get the woman from filing future claims against the insurer for bad faith, according to the story.

The problem with this case is it’s not as uncommon as you’d think.

Insurance companies are in business to look out for their own interests.  That means they want to collect insurance premiums from their policyholders and then try to pay out as little of that money as possible so they can keep their corporate profits high.

That’s great for insurance companies, but not so great for the people paying their premiums for coverage.

What all of this means is that you have to be aware of your rights as an insurance buyer, which can vary from state to state.

You must always remember that insurance companies don’t have your best interests at heart.

That’s where having a qualified, professional and skilled attorney by your side when dealing with an insurance company after any kind of accident is hugely important for any future claims.

The skilled attorneys here at MyPhillyLawyer handle cases like this on a regular basis for our clients, from vehicle accidents to a wide variety of personal injury cases.

If you are injured in an accident, don’t sign anything and don’t agree to anything when dealing with insurance companies.

First get medical treatment for your injuries, then contact your attorney to preserve your legal rights.

And if you believe your insurance company is acting in bad faith in the handling of your claims, you want to have the best legal representation beside you to help you win your case.

When losing isn’t an option, talk with MyPhillyLawyer.