Insurance Bad Faith

Insurance coverage protects individuals from losses that may result from accidents or medical problems. Insurance companies are obligated by Georgia state law to conduct business in a just manner, carrying out their service as promised to the consumer — or in “good faith” as the law states. However, as evidenced by many lawsuits, insurance businesses sometimes operate by “bad faith” practices instead.

While insurance bad faith lawsuits can arise in any insurance area, including car, home, and medical, the most common area for these situations is in motor vehicle crashes or incidents. Two typical ways in which an insurance company may act in bad faith include the following scenarios:

1. Neglecting to pay a policy holder the full amount of insurance entitled: For example, if an injured party holds an insurance premium for $50,000 in coverage and the full amount of expenses incurred by the individual is $30,000, the insurance company is required to cover that full amount. If acting in bad faith, the business may offer a smaller settlement for various reasons or no reason at all.
2. Rejecting genuine claims: In these situations, an insurance company may completely deny a fully legitimate claim by a policy holder, regardless of the policy holder’s coverage, without proper acknowledgement or examination of the claim.
   Specifically, Georgia law (O.C.G.A. § 33-4-7) mandates that in the event of property damages or injuries resulting from a motor vehicle accident covered by an insurance provider, the company has an obligation to “to adjust that loss fairly and promptly.”

When an insurance company is found in violation of good faith laws, it is not only obligated to pay the policy holder for his or her losses, but they are also subject to potentially pay the claimant further penalties and fees resulting from the bad faith. If you think you’ve been the victim of bad faith practices by an insurance company in Georgia, contact the insurance bad faith attorneys in Georgia with Wayne Grant at 1(866) 249-5513. Call for a complimentary and confidential case review.

Insurance companies tend to hold one thing above all else: Profit. People buy insurance to financially protect themselves against injury, illness, loss or damaging events and they put their trust in the insurance company to provide fair compensation in the case of any of the aforementioned situations. Unfortunately, many insurance companies look for ways to deny claims, even if they are legitimate, in order to make more money. This has become known as insurance bad faith.

Insurance companies, under law, owe a duty of dealing in “good faith,” or dealing fairly, with their policy holders. If an insurance company violates that duty by denying a valid claim to avoid paying a policy holder the money owed to them, they are operating under “bad faith.” The majority of insurance bad faith cases in Georgia relate to motor-vehicle accidents. Most often, an insurance company acting in bad faith will deny your claim, however, in some cases, the insurance company will deny the full benefits of coverage. For example, if your medical costs after an Atlanta auto accident total $20,000 and your insurance company only allows you $5,000, despite the fact that your claim is justified and your full coverage amount is $40,000, the insurance company is acting in bad faith by not paying full benefits.

Insurance bad faith can arise in several contexts. Generally, anytime an insurance company denies a valid claim without a reasonable basis for doing so, the insurance company is potentially liable for bad faith. This can happen with respect to claims for property damage to automobiles, property damage to homes or other property under a home owner’s insurance policy, failure to settle a personal injury claim within the Defendant insured’s policy limits, or failing to pay benefits due under a long-term disability insurance policy. For more information on insurance bad faith due to the insurance company’s failure to honor its obligations under a long-term disability insurance policy, see our informative blog titled “Insurance Company’s Bad Faith Refusal to Pay Disability Benefits.”

Some claims for bad faith may be based on the breach of a fiduciary duty, while other claims may be based on statutory law. For example, with respect to claims for property damage or destruction arising out of an automobile collision, according to Georgia law, “[in] the event of a loss because of injury to or destruction of property covered by a motor vehicle liability insurance policy, the insurer issuing such policy has an affirmative duty to adjust that loss fairly and promptly, to make a reasonable effort to investigate and evaluate the claim, and, where liability is reasonably clear, to make a good faith effort to settle with the claimant…” (O.C.G.A. § 33-4-7). If an insurer violates this duty, they not only must pay the claimant for the loss, but must also pay the greater of 50 percent of the insured’s liability for the loss or $5,000, as well as all attorney’s fees associated with the action.

Another type of insurance bad faith claim arises when the insurance company fails to settle a case within the policy limits, thereby placing its own financial interest ahead of its insured’s financial interest. This leaves the insured exposed to liability in excess of the available insurance coverage.

Another type of insurance bad faith occurs when an insurance company fails to defend, or fails to timely defend, its insured. For example, an insurance company may interpret the insurance policy in an unreasonable manner and take the position that the claim is not covered and, therefore, the insurance company has no duty to defend its insured in related litigation.

Insurance companies that act in bad faith know that they are in violation of the law, which is why they count on people blindly accepting their claim and benefits decisions. Do not leave it up to the insurance company to determine the validity of your claim or how much compensation you deserve. Speaking to one of the knowledgeable Georgia insurance coverage lawyers at The Law Offices of Wayne Grant, P.C., can ensure that you are not taken advantage of by your insurance company. Call us today to learn more at 866-249-5513.

In an effort to protect themselves and their families from financial hardship in the event of disability, many Americans decide to obtain long-term disability insurance. The person who obtains the policy is referred to as the “insured” and the insurance company that issues the policy is referred to as the “insurer.” This type of insurance policy is designed to pay the insured the salary, or a portion of it, that the insured would have earned if the insured had not become disabled. Insurance Company’s have an incentive to deny the largest claims. Thus, physicians (including surgeons), business executives, and other individuals with high income are subjected to bad faith practices with some frequency.

Sometimes when the insured becomes disabled the insurance company will refuse to honor its obligations under the insurance contract. Generally, the insurance company will claim that the insured is not actually disabled. If the insured proves that the insurance company is wrong, the insurance company will be liable for breach of contract. What does this mean? It simply means that the insurance company will be obligated to pay the insured the benefits it promised under the long-term disability insurance contract.

Damages for breach of contract may not be the only damages available to the insured if the insurer refused to pay in bad faith. Under Georgia law, O.C.G.A. § 13-6-11, a jury may award to the insured the expenses of litigation if the insurance company has acted in bad faith, been stubbornly litigious, or caused the insured unnecessary trouble and expense.

Additionally, the insured may have the right to bring an action against the insurance company for damages for bad faith, pursuant to O.C.G.A. § 33-4-6. For purposes of O.C.G.A. § 33-4-6, bad faith is defined as “any frivolous and unfounded refusal in law or in fact to pay according to the terms of the policy.” King v. Atlanta Cas. Ins. Co., 279 Ga. App. 554, 556 (2006). Insurance bad faith includes, but is not limited to, wrongfully denying a claim for benefits due under the insurance policy, not paying all of the benefits due under the insurance policy, failing to properly investigate a claim for benefits due under the insurance policy before denying the claim, or otherwise failing to pay the benefits due under the insurance policy without justification. For example, an insurance company could be found to have acted in bad faith if it takes the position that the insured is not disabled when the physicians who are treating the insured have indicated that the insured is disabled. Or, an insurance company might be liable for bad faith if it denies a claim for benefits due to the insured under the insurance policy on the ground that the condition that led to the disability was a “pre-existing” condition, when in fact there is no medical basis to conclude that the condition was “pre-existing.”

If the insured is successful in bringing a claim against the insurance company under O.C.G.A. § 33-4-6, the insurance company may be liable to the insured for “not more than 50 percent of the liability of the insurer for the loss or $ 5,000.00, whichever is greater, and all reasonable attorney’s fees for the prosecution of the action against the insurer.” This means that, if the insurance company refused in bad faith to pay the insured $1,000,000 in benefits due, the insurance company could be obligated to pay the insured $1,500,000 in damages, plus attorneys’ fees and the costs of bringing the action.

At The Law Offices of Wayne Grant, P.C., our dedicated Atlanta insurance bad faith lawyers can help you recover the compensation you deserve for losses you have suffered from an insurance company’s bad faith denial of your claim. Contact us today at 404-995-3955 or 866-249-5513 for a consultation.