When I started getting into trouble I became pretty acclimated to legal procedures. Calling my attorney and working out bail was just another way to spend a Saturday night. Unfortunately, the stiffer the charges, the more difficult it was to talk my way out of a bad situation. After so many charges, I found myself slapped with a long jail sentence, and I realized that I wanted to turn things around. Fortunately, my lawyer was able to walk me through yet another process, so that I could make the right changes. My blog discusses how to emotionally cope with legal issues so that you can start living a good life.
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Most forms of insurance litigation center on the notion of good faith. This is the legal idea that all insurers have a duty to assess claims fairly and pay out the legitimate ones. If an insurance company fails to do this, a claimant might sue to recover the compensation they believe the company rightly owes.
All of this makes sense in the broad scope of insurance law. However, it can get very nitpicky when an insurance litigation attorney focuses on the specifics of one case. Clients should understand how good and bad faith might apply if they're preparing to litigate or facing a lawsuit.
Reviewing Cases
The first potential source of insurance litigation is the company's obligation to faithfully review all claims. If someone submits a claim, the insurer should assess it with an unbiased view of its interests. Whenever the insurance company issues a policy, it accepts this duty and the fact it must execute the duty faithfully regardless of the potential impact on the firm.
Many insurers appoint an independent claims adjuster to put some distance between them and the decision to accept or reject a claim. They should document the adjuster's work so they can explain the decision if the case leads to insurance litigation. Notably, an insurance litigation attorney can ask the court to force the other side to produce these documents in a lawsuit.
Similarly, the insurer accepts a duty to review the claim in a reasonable period. If the insurer dawdles for months without even replying to a compensation demand, a court might see this as bad faith.
Policy Coverage and Validity
Generally, an insurer should pay a claim if the policy covers the damages and the claim is valid. A classic conflict occurs when the two sides differ over whether something is covered. Perhaps a claimant says their storm damage policy covers damage to a business. However, the insurer says the damage followed from a subsequent flood that was not included in the policy. Imaginably, the two sides may need to litigate the disagreement.
Proposing Compensation
Suppose an insurer accepts a claim's validity. The last potential hurdle is proposing a fair compensation package. If an insurer responds to a $1 million demand with a $10,000 settlement offer, for example, the company better have a good reason for doing so. Note that a few people do make outsized demands, so that may be the case.
However, insurers shouldn't lowball claimants just to save money. If an insurance company needs to protect its financial interests against extreme scenarios, it should do so with coverage limits rather than shorting the claimant.
For more information on insurance litigation, contact a company like Berg Plummer Johnson & Raval, LLP.
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