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Caufield & James LLP | Attorneys at Law

Serving clients in Hawaii and throughout California, including Sacramento, Los Angeles, Chico, Jackson and San Diego

Call Us Now Toll-Free

Offering Tailored Environmental And Business Counsel

Here’s how to prepare for your bad faith claim

On Behalf of | Apr 21, 2022 | Insurance Litigation

Your business might rest easy knowing that it has an insurance policy meant to cover a whole host of unforeseen circumstances. Yet, when something goes awry and you’re forced to turn to your insurance company for protection, chances are that they’re going to be hesitant to stand up for you. And even if they do, they’re going to do their best to avoid paying you what you’re asking for.

Why do insurance deny or delay claims?

There are a lot of reasons. Looking at the big picture, insurance companies are in the business of making money. So, they want to collect as much in premiums as possible while paying out as little as possible. With that in mind, realize that an insurance company is not your friend, and don’t just take their justifications for delays or denials as truth.

Specific reasons why claims are denied vary depending on the circumstances. But oftentimes an insurance company will claim that it has insufficient evidence to support the request or that there have been justifiable processing issues. Whether or not that’s true is another story.

How to build a bad faith claim

If you suspect that your insurance company is acting inappropriately in delaying your denying your claim, then you may be justified in pursuing a bad faith claim. In order to succeed on one of these claims, though, you’re going to need evidence supporting your position. So, as you consider your next move, think about completing each of these steps:

  • Carefully review your policy: Most insurance policy are meticulously detailed. As a result, a lot of businesses glaze over the fine print. But this is where many bad faith claims are made or broken. So, as you’re analyzing your policy, consider whether your business has done anything that would violate the contractual provisions or justify the insurance company’s actions.
  • Gather and retain all evidence: Be diligent in collecting the evidence that you need to support your claim. As you do, ensure that you’re retaining copies of everything that you submit to the insurance company so that you can reference it later if you need to.
  • Keep all communications with the insurance company: Make sure that you’re retaining all email, written, and telephonic correspondences that you have with the insurance company. This will paint a clear timeline and provide evidence of the insurance company’s justifications for a claim delay or denial.
  • Engage in discovery: Insurance companies hate to have their inner workings exposed, which is exactly what happens when you subpoena records and depose witnesses. By doing this, you can gain a better sense of why the insurance company acted the way it did, which very well may be indicative of acting in bad faith.
  • Educate yourself on the process: Bad faith insurance claims can be tricky to navigate. That’s why it may be beneficial for you to educate yourself on the process so that you better understand the timelines in play and what to expect moving forward.

Don’t let your insurance company take advantage of you

Your business works hard to maintain stability, but that can be rocked when an insurance company refuses or delays the protection that you were promised. But just because you may be unfamiliar with the insurance claims process doesn’t mean that you should take the insurance company at its word.

Instead, consider discussing the circumstances of your case with an attorney who is experienced with bad faith claims and other aspects of insurance law. That way you’ll know whether you have justifiable action against your insurance company, which may help provide your business with the financial resources that it needs to get back to business as usually.

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