“Bad Faith”…almost sounds like an oxymoron. And while the use of the word ‘rages’ to describe the prevalence of bad faith litigation against insurance carriers seems a tad…overwrought, the usage of the term ‘rages’ is correct when describing the general perspective of insureds when they are forced to engage in litigation against their carrier. (Specifically, we at Sabal have never met an insured forced to take legal action for nonpayment of a claim…who didn’t have a pretty well-defined sense of rage regarding the matter.)
Insurance carrier bad faith is never fun to discuss and carriers DEFINITELY don’t like to do so (recall the Progressive Insurance social media debacle from earlier in 2012), but there are those instances where the insured-insurer relationship frays to the point that legal action is the final remedy for securing full and proper payment of a claim. The commentary piece on bad faith (link) includes some cases that are, likely, among the most egregious. But the underlying lessons would serve the observer (and insured) well to take note. That is…keep accurate records, make sure to maintain an objective history of the claim (i.e., don’t embellish facts…in the event of litigation, that HURTS…it does not HELP.) And also, insurance carriers DO have to perform some due diligence in order to process claims (on their end). But the primary takeaway – from our perspective – is the same as many insurance claims matters…that is? Document Document Document. Because that will be necessary if the matter gets to the point that only the attorneys are charged with sifting through the rubble to discern the final outcome (and payment!)
One way to AVOID bad faith litigation is to secure well-worded policies in the first place and to have a broker who understands your needs, concerns, and exposures and can help you navigate the claims process.