So, what is Insurance Bad Faith Litigation?
Well, in some situations, insurance bad faith litigation occurs when the insurance company denies a claim for coverage without reasonable justifications. Let’s look at this example – Gary owns a bar and restaurant that gets burned down. Gary makes an insurance claim with his carrier to recover compensation for his loss. The insurance carrier denies the claim. This kind of feels like “bad faith”, especially if the refusal to pay is not predicated upon a reasonable justification.
Now, what is important to know is that the burden of proof is on the insured. So that means the insured must provide evidence to demonstrate that an insurer failed to exercise good faith in the processing of a claim of its insured. Basically, you have to prove that the insurance company did not have a reasonable justification in denying the claim.
Insurance bad faith claims are difficult because “a reasonable justification” is a low standard. Let’s say that Gary, above, was having financial trouble; his business took a downturn for the last five years and he has been trying to sell the business for 2-3 years. Courts have held that this is a reasonable justification to refuse payment. Because of this low standard, insurance companies routinely hire private investigators to help them build their case to support a “a reasonable justification”. This is why it is important to have someone on your side, fighting for your rights.
Another common tactic that insurance carriers use is bifurcating the case, which means separating the trial into two cases. Insurance bad faith is complex because it’s part contract and part tort. The contract part arises out of the fact that you’ve paid your premiums for coverage and now the insurance carrier is failing to uphold their end of the deal. The tort part arises from the fact that the insurance carrier refuses to pay a claim that should have been paid, so there is an additional loss.
Insurance carriers often use this tactic so that they can wear you down and minimize their exposure. Bifurcating the case means there will be two trials. The first trial, the jury will determine if the contract was breached and how much compensation you should receive. They get to keep out, from the jury, the act that they refused to pay, even though they agreed to pay.
The other important thing to know is that under Revised Code Section 2315.21(D), the award for bad faith is capped at two times the compensatory (or breach of contract) damages.
How can we help?
If you suspect that your insurer is being unfair or dishonest with you (for example, about the facts of your claim, the value of your claim, or the coverage under your policy), you’ll want to make sure you have the right legal team on your side. This is not something you want to try on your own. By working with our team, you can get the legal advice and guidance you need to determine if you have a case and figure out how to proceed. We will let you know whether your rights have been violated and what to do about it.