After a terrible storm, car crash, or accident, victims rely on their insurance to cover the cost of their damaged property, medical bills, and mental suffering. However, the insurance company sometimes denies valid claims without any real reason. When valid claims are denied, it’s often because the insurance company wants to save money.
When the insurance company intentionally denies a claim without a good reason, it’s known as a bad faith insurance claim. If this happened to you or someone you love, you have options. In this blog, the Andy Citrin team outlines what constitutes a bad faith claim and what you can do to protect yourself and your case.
Alabama’s Approach to Bad Faith Insurance Claims
Insurance companies have a duty to evaluate and process your claim in good faith. This means that they must reasonably and efficiently investigate, process, and compensate you for your valid claims. However, adjusters and insurance company employees don’t always meet this standard.
“Too often, insurance companies intentionally deny claims, purposely ignore evidence, or decide not to fully investigate the facts. Thankfully, you have legal rights when you’re the victim of a bad faith denial.”
In Alabama, there are two types of bad faith insurance claims:
- Refusal to pay (“normal bad faith”): the insurance company knowingly rejects your claim without any reasonably legitimate reason for their decision
- Refusal to investigate (“abnormal bad faith”): the insurer fails to adequately investigate your claim
The Alabama Supreme Court has outlined a series of elements that you must prove in either type of bad faith insurance claim:
- You entered a contract with the insurance company, and it breached this agreement.
- The insurer intentionally rejected your claim.
- There wasn’t a legitimate reason for its denial.
- The insurance company knew that its denial was unsupported by the facts and law.
- In a failure to investigate claim, you must also show that there wasn’t a legitimate or arguable reason to deny the claim.
While you may think this sounds relatively simple, proving a bad faith insurance claim in Alabama is remarkably difficult. For example, let’s look at a 2013 Alabama Supreme Court decision, State Farm Fire & Cas. Co. v. Brechbill.
In Brechbill, a homeowner purchased a 30-year old home. He hired a home inspection service to evaluate the property, and the report noted that there was no evidence of settling or structural damage. His insurance company, State Farm, also inspected the house and similarly did not find any serious, unrepaired issues.
Then, the neighborhood was ravaged by a storm with wind gusts reaching 60 mph or more. After the storm, the homeowner noticed cracked and buckling interior walls, roof damage, and other structural issues. He promptly filed a claim.
The insurance company paid an engineering firm to examine it. While the engineering firm admitted that its inspection was simply a visual review, it found that most of the damage was preexisting or due to the age of the home. Even though this finding was inconsistent with previous inspections, State Farm denied the claim.
The homeowner disagreed with this decision and had the house reinspected on several occasions. All of his experts thought that the home’s damage was wind-related and questioned the accuracy of the insurance company’s findings. Each time, State Farm reviewed the reports and issued a letter, again denying the claim.
Eventually, the case reached the Alabama Supreme Court. The court noted that while State Farm’s investigation may have been imperfect, there was a debatable reason to deny the homeowner’s claim. Because the insurer had repeatedly reviewed and reassessed its decision, it had acted in good faith – even if it disregarded strong evidence supporting the claim.
This doesn’t mean that it’s impossible to win a bad faith insurance claim in Alabama. However, you’ll need help from an aggressive and detail-oriented lawyer who can carefully assess your circumstances and present compelling legal arguments.
5 Signs Your Insurance Company Could Be Acting in Bad Faith
When you’re just trying to recover after a devastating car crash, horrible storm, or act of vandalism, it can be hard to understand whether or not you’ve been unfairly denied the coverage that’s rightfully yours. Keep an eye out for these red flags:
- The insurance company fails to inspect or evaluate your property or records
- It avoids your calls and does not respond to communications.
- There is little or no investigation of your claim.
- The insurer does not provide a written explanation of its decision.
- Its “justification” contradicts the clear terms of your insurance policy.
If you suspect bad faith, do what you can to document every exchange with the insurance company. Ask for copies of every exchange and decision in writing. Armed with this information, consult with an experienced bad faith insurance claim attorney who can help you organize your evidence into a compelling case.
If you do need to file a lawsuit to recover the money you were promised under the insurance policy, your lawyer can help you make the most of your case. An insurance company found to be acting in bad faith typically must cover your losses (up the policy’s limits) and pay punitive damages.
Claim Unfairly Denied? Don’t Wait to Call the Andy Citrin Team
If you or someone you love is being denied the compensation they deserve, don’t wait to contact us. We’ve won millions of dollars for clients just like you, and we’re ready to hear your story and offer down-to-earth advice about what to do next. To schedule your consultation today, please call 251-888-8888 or send us a message using our simple online contact form. We look forward to hearing from you!
State Farm Fire & Cas. Co. v. Brechbill, 144 So. 3d. 248 (Ala. 2014). Retrieved from https://casetext.com/case/state-farm-fire-cas-co-v-brechbill-1/
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.