Lessons for Bad Faith Lawsuits

Thinking of suing an insurance company for bad faith claims denial? If so, there may be some rules of thumb you can apply to succeed. As an article in the Insurance Journal, there were several recent cases where insurance companies were found liable for bad faith claims handling.

They include:

  • Bello v. Merrimack Mutual Fire Ins. Co.: A storm significantly damaged a retaining wall on the policyholders’ home. The insurance company’s claims adjuster maintained that the damage was caused by a preexisting condition, and the insurance company denied the claim. The insurer later reversed itself after the policyholders protested the decision, and paid the claim. However, the New Jersey Superior Court found that Merrimack had in fact acted in bad faith.
  • Delish v. Metropolitan Adjustment Bureau: In this case of fire loss, there was a 20-month investigation and two different claims managers and claims adjusters. Later, an arbitration panel found that the policyholder claim to business interruption losses was denied because of a technical failure of proof and accounting losses. But this wouldn’t have been an issue if the insurance company had “simply and promptly paid that which was not subject to reasonable dispute.”

The Journal article notes these cases demonstrate the following lessons for winning a bad faith insurance lawsuit:

  • The policyholder must be aware of his rights and pursue them aggressively
  • The policyholder should respond to the insurance company’s reasonable request for information

If you think your insurance company has acted in bad faith, work with a law firm experienced in fighting against big insurance companies. Contact Sokolove Law today for a free legal consultation.

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