While the website of The Wu Group emphasizes the analytical and research-oriented side towards insurance law, we also tackle the important legal aspect for those individuals confused as to damages and what steps to take. Here we discussed pursuing a legal action against your insurance provider with the intent to integrate the academic approach with the professional details expected from us here at The Wu Group.
In simple terms, a “bad-faith” claim against your insurance provider is – when an insurance company refuses to fulfill its contractual obligations, such as payout, or to properly investigate and ensure coverage for damages or loss. The refusal or failure to deliver, however, arises in a situation where the insurer has no legitimate excuse. Bad faith may be evaluated as intentional or unintentional.
Academically, insurance bad faith lawsuits are important to study because of how tied up they become in academic legal circles. Sure, it isn’t as easy as a simple breach of contract. That is why a lot of insurance law requires outside experts – such as lawyers who are familiar with insurance contracts – to fully understand the nuances at hand. As a result, legal scholars have been able to push the understanding of the concept further and examine how to learn from reform and analyze and predict the effect of future legal doctrine. In short, studying and researching why and when bad faith arises is helpful to understanding insurance law because it is a unique mechanism created through legislated from previous bad acts.
The most common result of a bad faith claim is that the insurer provides coverage to the client, pressure under legal recourse. Other results may include the insurer paying for extra damages incurred during a claim subsequently after discovering the bad claim. It is not uncommon during a bad faith lawsuit for an insurance company to simply drag out the proceedings instead of paying for the coverage upfront. The extra stress placed on a policyholder will often act as a new claim for damages, resulting in additional, and potentially expensive, work.
When a policyholder ‘wins’ a bad faith case, the outcome can be the re-evaluation of the original claim. Let’s say you had a damaged roof and originally asked for $1,000 in damages for your claim. When you win law suit, not only do you get the $1,000 in damages from the first claim, but also any other reasonable and related costs that resulted from the claim.
As a rapidly-growing field of research and study for legal scholars, there unfortunately isn’t one researcher who has published enough about insurance ‘bad-faith’ and legal recourse. Professor Zhang Guowei is one such individual who does raise a general point in his publication entitled Theory and Practice of Insurance Bad Faith Law in China. Whether or not this method of research is applicable to a broader audience is a different question entirely.
The process behind filing a lawsuit against your insurance provider is not as straightforward as it sounds. In fact, if you’re dealing with damaged or destroyed property, medical claims, or any situation where the financial protection wasn’t given when it should have been, the process is much longer. Step one – recognize your situation is leading towards a legal issue. Step two – speak to an insurance law legal counsel. Step three – follow the advice of said counsel precisely to avoid interference – i.e., do not skip steps, call the insurance company, etc.
No one wants to be in a situation where they are having to file a lawsuit against their insurance company. However, due to the financial nature of insurance providers, it’s only natural for individuals to try and avoid those suits as much as possible. Slowly but surely, insurance bad faith assessment is becoming a common topic for study and example in legal journals, so we expect to see more publications relevant to the subject as the years go on. The key is to remember that insurance bad faith practice exists to protect consumers and allow lawyers to conduct research in a field that is intended to reform itself.