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What to Expect in an Insurance Bad Faith Claim

What to Expect in an Insurance Bad Faith Claim

The legal process can be confusing. It’s not always easy to know what steps you should take, how a civil case works, and what you should expect. If you believe you have an insurance bad faith claim, and want to know what a typical case looks like, this article is for you.

What Constitutes Bad Faith?

When you purchase an insurance policy, you expect the insurance company to honor its commitments in good faith. Unfortunately, some insurers engage in unfair tactics, delay payments, or wrongfully deny valid claims. When this happens, policyholders have the right to pursue an insurance bad faith claim. If you suspect your insurer is acting in bad faith, understanding the legal process can help you prepare for what lies ahead. This guide outlines the key steps involved in a bad faith insurance claim, from retaining counsel to potential trial and settlement.

  1. Retaining Legal Counsel

The first step in pursuing an insurance bad faith claim is hiring an experienced attorney who specializes in insurance litigation. Bad faith claims are complex, often requiring legal knowledge and strategic negotiation to hold insurers accountable. When selecting an attorney, look for someone with a strong track record in handling these cases and who is well-versed in state insurance laws. At Boland Aarab, our attorneys have thousands of hours of courtroom experience and have handled numerous insurance cases at all levels of the legal process including settlement, trial, and appeal.

What to Expect:

  • Initial Consultation: Your attorney will review your case, assess the insurance company’s actions, and determine whether bad faith occurred.
  • Review of Your Insurance Policy: The attorney will analyze your policy’s language, coverage, exclusions, and obligations of both parties.
  • Gathering Evidence: You will need to provide documentation, including policy documents, communications with the insurer, claim denial letters, and any other relevant documentation.
  1. Sending a Demand Letter

Once your attorney determines there is a valid bad faith claim, they will typically draft and send a demand letter to the insurance company. This letter serves as a formal notice outlining the alleged bad faith actions and requesting that the insurer correct its behavior by honoring the policy and paying the claim.

What to Expect:

  • Content of the Demand Letter: It typically details the policyholder’s claim, the insurer’s wrongful actions, and the legal basis for a bad faith claim.
  • Deadline for Response: The insurer is usually given a deadline (often 30 to 60 days) to respond before legal action is taken.
  • Potential Resolution: In some cases, insurers may choose to settle at this stage to avoid litigation.
  1. Filing a Lawsuit

If the insurance company refuses to settle or respond appropriately, your attorney will proceed by filing a complaint in court. This marks the official start of the lawsuit.

What to Expect:

  • Drafting the Complaint: The complaint outlines your legal claims, including breach of contract and bad faith. Your attorney will draft the complaint and should keep you informed as to its status.
  • Filing in the Appropriate Court: Your attorney will file the lawsuit in state or federal court, depending on jurisdiction and the nature of the claim. Sometimes a claim can be filed in either court. In these instances, your attorney should communicate with you to determine the best course of action for your specific needs.
  • Serving the Insurance Company: The insurer is formally notified and given time to respond, typically within 30 days.
  1. Discovery Phase

Once the lawsuit is filed, both parties engage in the discovery phase, where they exchange information, documents, and evidence relevant to the case.

What to Expect:

  • Interrogatories: Written questions sent to the insurer that must be answered under oath.
  • Requests for Documents: Your attorney will request company records, internal communications, and claims-handling guidelines.
  • Depositions: Sworn testimony from insurance representatives, claim adjusters, experts, and any other individuals relevant to the litigation.
  • Expert Witnesses: In some cases, professionals such as insurance industry experts or forensic accountants may be retained to provide testimony supporting your claim. Typically, an insurance bad faith claim is handled on a contingency fee basis and the attorney’s firm will pay the costs associated with experts until the client has been paid.
  1. Motion Practice

During the litigation process, attorneys may file motions to resolve issues before trial.

What to Expect:

  • Motion to Dismiss: The insurer may attempt to have the case thrown out.
  • Motion for Summary Judgment: Either party may argue that there is no need for a trial because the facts and law clearly favor their position.
  • Pre-Trial Motions: These may seek to exclude certain evidence or clarify legal arguments.
  1. Settlement Negotiations and Mediation

Some bad faith insurance claims settle before reaching trial. Your attorney will engage in negotiations with the insurance company, and in some cases, the court may require mediation.

What to Expect:

  • Settlement Offers: The insurer may propose a settlement to avoid the risk of trial.
  • Mediation Sessions: A neutral mediator may facilitate discussions to reach a resolution.
  • Weighing the Offer: Your attorney will help evaluate whether the settlement is fair and in your best interest. As the client, you always have the final say when deciding whether you want to accept a settlement offer.
  1. Trial

If the parties are unable to reach an acceptable settlement, the case proceeds to trial, where a judge or jury will decide the outcome.

What to Expect:

  • Jury Selection: In a jury trial, attorneys will work to select impartial jurors.
  • Opening Statements: Both sides present their arguments.
  • Presentation of Evidence: Witnesses testify, documents are introduced, and legal arguments are made.
  • Closing Arguments: Final attempts to persuade the judge or jury.
  • Verdict: The judge or jury delivers a decision, which could result in compensation for damages, including punitive damages if the insurer’s conduct was particularly egregious.
  1. Appeals Process (If Necessary)

Sometimes, but not always, a party will appeal the decision. When selecting an attorney it is important to select an attorney that handles appeals. Some do not which means that if the verdict is appealed, or if you wish to appeal the verdict, you would have to find another attorney. At Boland Aarab, our attorneys are experienced in appealing verdicts and will be with you every step of the way.

What to Expect:

  • Filing an Appeal: The party wishing to appeal will file an appeal to a higher court, arguing legal errors were made.
  • Review by Appellate Court: The higher court examines the case record and may reverse, affirm, or remand the decision.
  • Potential for Further Settlement Talks: Sometimes, appeals lead to new settlement opportunities.

Conclusion: What Clients Should Keep in Mind

Filing an insurance bad faith claim is a lengthy and complex process, but with the right legal representation, policyholders can hold insurers accountable and recover the compensation they deserve. If you believe your insurance company has acted in bad faith, taking the first step by consulting with an experienced attorney can make all the difference. Understanding each stage of the process helps set realistic expectations and ensures you are prepared for what lies ahead.

If you have questions about your insurance claim or believe you have been treated unfairly, please visit our website to set up a free consultation.