What is the best way to fight auto insurance company bad faith?

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Things to Remember...
  • A car insurance agreement is fundamentally a contract, so taking auto insurance companies to court to win focuses on this contract
  • Many car insurance companies use a combination of specific details about the car owner and his vehicle as well as boilerplate language to limit the amount of risk that will be covered by the policy
  • While any licensed attorney can take on a bad faith case, a policyholder will need to find the right attorney with the relevant experience
  • Understanding the problem of contract case recovery being limited, many states have passed bad faith insurance laws making it clear that if a party does win a case, his damages can be three times the case cost.

Ideally, the best way to deal with a car insurance company’s refusal to follow through on its policy agreement is to first make sure the dispute actually qualifies as a practice of bad faith.

Many times policyholder will feel that they have been unfairly treated with a claim denial only to find out the technical terms clearly say otherwise.

Our FREE car insurance comparison tool can help you be prepared ahead of time when you enter your ZIP code to find reliable companies.

Because of this fact, the help of an experienced insurance attorney with contract experience is critical.

To avoid trouble with auto insurance companies, compare FREE auto insurance quotes from reliable companies with your ZIP code above.

What’s in the Terms

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A car insurance agreement is fundamentally a contract, so taking auto insurance companies to court to win focuses on this contract. One party agrees to pay another a set amount of money to cover the risk.

Should that risk manifest and become real, the second party agrees to pay the cost of the result, within reason and spelled out limitations.

A bad faith denial involves an insurance company knowing it needs to provide a coverage per an agreement and the intentionally avoiding that obligation when a valid claim comes in from the policyholder.

How the insurance policy agreement is actually worded makes all the difference.

Many car insurance companies use a combination of specific details about the car owner and his vehicle as well as boilerplate language to limit the amount of risk that will be covered by the policy.

It’s the policyholder’s job to read these details and understand them thoroughly before agreeing and paying for the policy.

If a risk occurs and it is not covered or it is specifically exempted from the policy, the car insurance company is well within its contracted rights to turn down the related claim, regardless of how the policyholder feels it’s unfair.

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Intent and Proving It

For a charge of bad faith to occur, a policyholder has to be able to prove three things:

  • The risk in question was actually covered by the car insurance agreement
  • The insurance company knew the risk was covered without a question or ambiguity
  • The insurance intentionally avoided the related claim submitted and knew it was a valid charge to the policy

This is a lot to prove conclusively. At a minimum a policyholder has to find the applicable risk terms in the policy, the show somehow the actions of the insurance company were intentionally wrong, and that the policyholder suffered a related injury.

It becomes quickly obvious getting all of this information and making the related argument in court will require an attorney’s help.

Finding the Right Help

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Personal injury cases can include punitive damages but typically don’t involve a dispute over a contract. A skilled attorney who understands both aspects of the law as well as how insurance companies will defend themselves in court is important.

If the court throws out the claim as a tort or personal injury then the policyholder will need to sue on a contract basis, which will likely require him to pay the attorney’s services up front.

This can be far more expensive than any related recovery may be worth.

In many cases, paying up front isn’t worth the trouble. Ending the policy early and limiting the damage may be the far easier course of action.

Bad Faith Exception

Understanding the problem of contract case recovery being limited, many states have passed bad faith insurance laws making it clear that if a party does win a case, his damages can be three times the case cost.

This provides some level of punitive punishment to deter insurance companies from acting in bad faith and providing some level of recovery for the plaintiff to pay for legal fees and still have something left over.

This provides some level of punitive punishment to deter insurance companies from acting in bad faith and providing some level of recovery for the plaintiff to pay for legal fees and still have something left over.

The above said bad faith lawsuits are difficult to prove and often don’t have a smoking gun piece of evidence to win the case easily.

The policyholder may still be better off just canceling a contract and finding a different car insurance company to work with as a faster solution.

To do so quickly, a number of Internet comparison websites exist where a car owner can find a better policy quickly.

Enter your ZIP code into our FREE auto insurance comparison tool to find great quotes from great companies now!

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