An insurance company owes its insured a legal duty to act in good faith, to evaluate claims fairly and to process payment if warranted. An insurance company can also owe these same duties to other insurance companies who may have to pay money to resolve a claim if an underlying carrier does not perform. If the insurer actively works to avoid investigating, negotiating or paying a claim, it can be found to be acting in “bad faith.” When an insurance company acts in bad faith, there is legal recourse.
Bad faith lawsuits can stem from a number of actions, among them:
- Improper denial of coverage
- Failure to communicate relevant information
- Failure to conduct a reasonable investigation
- Refusal to pay the claim without investigating
- Failure to promptly process a claim
- Failure to promptly confirm or deny coverage
- Failure to attempt a fair and reasonable settlement
- Offering significantly less than the true value of a claim
- Failure to provide a reasonable explanation for the denial of a claim
- Failure to disclose policy limits
- Wrongfully exposing an excess insurer to liability
In one recent example, Bartimus Frickleton Robertson Rader was retained to represent a school bus driver whose insurance carrier wrongfully denied him coverage after an accident that resulted in the death of a 6-year-old boy. When the bus driver was charged with involuntary manslaughter for his negligence, his primary insurer and excess insurer hired a criminal lawyer to represent him in the criminal matter. That lawyer advised the bus driver to plead guilty. When the family of the boy refused to settle for less than the policy limit, the insurers decided to use the threat of a coverage denial to force the family to accept a much smaller settlement. When the family stood its ground, the insurers actually denied coverage to the bus driver.
Kip Robertson and Jim Frickleton represented the bus driver. They established that the policy did, in fact, provide coverage for the bus driver and that both insurers owed him a duty to act in good faith. After developing extensive evidence that both carriers had acted in bad faith, Kip and Jim secured a settlement in the amount of $13 million, which the driver used to satisfy his obligations to the boy’s family.
We have also worked with companies facing liability and other insurance carriers that have been exposed to financial loss or ruin when another insurance carrier has failed to perform its obligations in good faith.
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Bartimus Frickleton Robertson Rader has significant experience representing individuals, business owners and insurance carriers who have been the victims of insurance bad faith.