Lexington, KY Insurance Bad Faith AttorneyWhen insurance companies don’t play by the rules
If you are being unfairly treated by your insurance company and it seems to be going to extremes to deny your claim or give you the run around, you may have a legal cause of action against it. Insurance companies have statutes and regulations they need to obey. Though in most circumstances they act within the bounds of the law, there are times when their actions are outrageous and illegal. Depending on the circumstances, if an insurance company is treating you without respect, is not taking a claim seriously and breaking the law, your insurance company could be sued.
Possible causes of action can arise from the common law (based on decisions by judges) and statutory law. Possible claims include those under Kentucky’s Consumer Protection Act (which makes illegal any unfair, false, misleading or deceptive acts or practices in the conduct of any trade or commerce) or the state’s Unfair Claims Settlement Practices Act (UCSPA).
Kentucky insurance bad faith claims based on state statute
The UCSPA covers “first party” bad faith claims, where the dispute involves the insured and his or her insurance carrier, and “third party” bad faith claims, in cases involving a third party presenting claims against you that should be covered by your policy. Some of the actions made illegal under this law include:
- Misrepresenting facts or insurance policy provisions
- Not acknowledging and acting reasonably promptly after communications concerning claims
- Failing to adopt and implement reasonable standards for the prompt investigation of claims
- Refusing to pay claims without conducting a reasonable investigation based on all available information
- Failing to affirm or deny coverage of claims within a reasonable period of time
- Not trying in good faith to promptly, fairly and equitably settle claims where liability is reasonably clear
- Failing to promptly provide a reasonable explanation of the basis in the insurance policy for denial of a claim or for the offer of a compromise settlement.
A plaintiff in a bad faith claim under the UCSPA needs to show that the insurer
- Was obligated to pay the claim under its policy,
- Lacks a reasonable basis in law or fact for denying the claim, and
- Either knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a claim existed, which can be shown by evidence that the insurance carrier’s conduct was outrageous or in reckless indifference to the rights of others.
The core issues in these types of cases is whether the dispute is just over the language of the insurance contract (if so, a bad faith claim would fail) or whether there are elements of bad faith, outrageous conduct, an evil motive by the defendant or its reckless indifference to the rights of others.
What wouldn’t necessarily qualify as bad faith by an insurance company, depending on the circumstances, is sloppiness, late payments, an offer to settle for less than policy limits or an incorrect valuation of a claim.
Damages available in a successful Kentucky insurance bad faith claim
If the wronged person can prove their bad faith claim, they’re entitled to not only the value of the benefits denied, but also attorney’s fees and perhaps even punitive damages, which are meant to punish the defendant and discourage it, and others, from taking similar actions in the future.
In Kentucky the conduct that must be shown in order for punitive damages to be considered is oppression, fraud or malice.
- Oppression: Conduct intended to subject the plaintiff to cruel and unusual hardship
- Fraud: Intentional misrepresentation, deceit or hiding material facts known by the defendant and made with the intent of causing injury to the plaintiff
- Malice: Conduct intended to cause injury to the plaintiff or conduct that’s performed with a flagrant indifference to the rights of the plaintiff and with a subjective awareness that such conduct will result in human death or serious bodily harm.
Take action if you’re the victim of Kentucky bad faith insurance practices.
Not every claim denial is done in bad faith. Most insurance companies play within the rules. If a claim is denied or a proposed settlement is low, some additional information and/or some negotiations may resolve the dispute. But if you believe that your insurer is ignoring the terms and conditions in your insurance policy, it may be time to contact an attorney.
You purchase insurance for a reason — for coverage in case an event within the policy terms happens and you face possible costs and liability. If such an event happens, you expect to be treated fairly and that the insurance carrier will comply with the policy and applicable laws. If the insurance company isn’t living up to its end of the bargain, don’t just give up.
If you believe you have been wrongfully denied coverage on your insurance claim, be sure to collect and save all the documentation about it and contact us. We can evaluate your case with experts in the insurance industry; and if you are the victim of insurance bad faith, we will work with those experts to get you the compensation you deserve.