If you’re injured or harmed due to an accident, you’ll very often have to deal with your own or someone else’s insurance company, and insurance company arbitration may be required. This can be an obstacle, because insurance companies would generally prefer not to pay any more in compensation than they absolutely have to.
But what you might not know is that, in general, insurance companies have a legal obligation to act in “good faith.” This means that they’re legally required to investigate, evaluate, and process your claim fairly. If it’s clear that you’ve been harmed and someone else is at fault, or that the accident is covered by the policy, the company has a legal duty to offer you a fair settlement.
Of course, insurance companies have their own definition of “fair,” which is why you need a good lawyer on your side to negotiate with them. But in extreme cases, if an insurance company completely stonewalls in a way that’s totally unreasonable, the company itself can be sued for acting in “bad faith.”
In a recent California case, a man suffered extensive injuries in a car crash with a driver who had no insurance. The man asked his own insurance company to pay the $250,000 limit under his “uninsured motorist” coverage. He also promptly provided his insurer with all his medical records.
Nonetheless, the insurer totally ignored him for five months. The company then demanded that the claim go to arbitration, under a part of the policy that said that if a dispute can’t be resolved, it has to be arbitrated.
The man sued the insurance company for acting in bad faith, and the California Court of Appeal allowed the suit.
The court said that while the insurance policy allowed for genuine disputes to go to arbitration, it didn’t allow the company to simply demand arbitration without investigating, evaluating and attempting to fairly resolve the claim, as a means of stonewalling and delaying payment of a fair settlement.
In another recent California case, an insurance company sent an adjuster on an inspection after a tree fell and damaged a policyholder’s house and car. The adjuster allegedly made demeaning comments to the homeowner and lied about the scope of coverage under the policy.
The same court said the adjuster could be sued personally for misrepresenting the coverage, describing the adjuster’s alleged conduct as “appalling.”
If you’ve experienced an injury or loss, or are having trouble dealing with insurance company arbitration, call us at 864.233.7200 or 1.800.903.8101 for a free telephone consultation.