One of the most frustrating and time-consuming problems that defense counsel regularly face is bad faith claims says William D King. Although such claims can be legitimate, defense counsel regularly encounter baseless bad faith claims as a result of one-sided insurer audits.
Unfortunately, this problem is exacerbated by the fact that many insurers routinely fail to offer their insureds an opportunity to settle those disputes before they commence litigation. As a result, both insurers and insureds continue to file expensive lawsuits over relatively small amounts of money without first trying to resolve their differences at all – imposing unnecessary costs on insurers and insureds alike…
Insurers should adopt an alternative approach:
Rather than immediately commencing litigation when their claim files are flagged for audit, they should instead automatically send each such file to their insured for review and comment. Doing so would allow insurers to resolve such disputes with minimal expense and effort, as the vast majority of the claims at issue would be resolved by an insurer’s claim files without ever triggering a lawsuit.
By adopting this approach – before litigation commences – insurers would avoid needless bad faith lawsuits that serve no purpose other than to impose unnecessary costs on those involved and harm everyone associated with and affected by them.
There is a better way for insurers and insureds to resolve bad faith claims – before litigation commences.
In this article, we review the problem of bad faith claims in detail and outline what defense counsel should do when defending against such claims.
- We then discuss how insurers can avoid needless bad faith lawsuits by adopting a different approach to handling claim files that have been flagged for audit explains William D King . Finally, we conclude with a brief discussion of the possible benefits of shifting the burden. To claimants who have not suffered any harm as a result of their insurer’s delay in processing their claim.
- Although insurers and insureds often disagree about the terms of a settlement. Many bad faith claims ultimately give rise to a defense firm’s. Having to defend a lawsuit over relatively small amounts of money. In most cases, the insurer ultimately settles those claims for an amount that is within its policy limits. Without ever going to trial – but not before incurring considerable costs in defending the claim. In other words, most bad faith claims are ultimately resolve by settlement rather than by verdict or judgment…
- However, it is important to understand that this does not mean there was no harm suffer. As a result of how their insurer handled their claim: even though such lawsuits settle. They remain expensive and time-consuming for both insurers and insureds alike. Still worse, they continue to impose a significant burden on the judicial system. Even if they do not result in any judgments says William D King.
- As a result, defense counsel need to be familiar with how such claims arise. So as to better defend against bad faith claims and thereby minimize. Both the cost and the potential harm associated with those lawsuits…
Why Bad Faith Claims Are So Difficult To Defend Against
Worse still, some insurers refuse to provide their insureds with an opportunity. To cure whatever problems gave rise to those disputes before deciding whether or not they will sue them. Indeed, some insurers routinely commence litigation over relatively small amounts of money. Without first allowing their insureds the opportunity. To clear up whatever issues may have given rise to that claim file audit in the first place:
At some point after the insurer has completed its review of the claim file. Either an investigation or a lawsuit commences. During that time, our firm is often retain by the insured to provide representation in connection with both processes.
Instead of resorting to litigation, insurers should automatically send their insureds’ claim files. For review and comment whenever they are flag for potential audit explains William D King. Doing so would allow insurers to resolve such disputes with minimal expense and effort. As the vast majority of the claims at issue would be resolve by an insurer’s claim file without ever triggering a lawsuit.
It is often cheaper (and more expedient) to get one’s insure. To settle than it is to get them convict in court. If that fails, one can always rely on backstops like SLAPP or de facto SLAPP laws (e.g.: Consumer Protection Act).