Auto liability insurers may attempt to minimize your payout in bad faith
According to the Census Bureau, every year there are more than 10 million motor vehicle accidents in the United States. Many of these accidents cause serious injuries, leading to significant expenses for victims. This is why auto liability insurance is so important.
Auto liability insurance, or acceptable proof of sufficient financial responsibility, is required in all states. When a driver negligently causes a car accident, the driver’s liability insurance or personal assets are used to pay victims for injuries and property damage. Auto liability insurance is meant to ensure there is a guaranteed pool of needed resources available to accident victims – but, when an insurance company is involved, sometimes bad faith tactics can leave victims coming up short.
Insurers may fail to accept reasonable settlement in bad faith
Every insurance policy imposes an implied duty on the insurance company to act in good faith and to deal fairly. This means that when an insurance claim is legitimate, funds should be paid out without delay in the full amount the victim is legally entitled to. However, the fact of the matter is that insurance companies need to turn a profit, and some companies try to maximize that profit by getting away with denying, delaying or discouraging legitimate claims on auto liability policies.
By law, there are minimum coverage limits for auto liability insurance policies. The minimum policy limits vary by state, and many motorists carry liability insurance policies with limits far above the minimum. Yet, even on the higher-limit policies, some insurance companies try to minimize payouts in bad faith by fighting legitimate claims.
Imagine that an accident victim is expecting a payout on an auto liability policy and offers to settle at or near the coverage limit. There are no stark deficiencies with the victim’s claim, but the insurance company still refuses a reasonable settlement offer -the insurance company presumes they will not have to pay more than the policy limit and therefore has little incentive to settle, hoping they will win or that the claimant will have to abandon the case. When the insurer loses at trial in this scenario, they have acted in bad faith by rejecting the settlement offer and can be forced to pay the judgment even in excess of the policy limit.
Suspect bad faith? Get in touch with an insurance lawyer
The above example is just one way insurance companies may act in bad faith to avoid fully paying an auto accident claim. You may even have to fight your own insurer to get a full payout, which could happen if you were struck by an uninsured motorist and must rely on your own underinsured motorist policy.
How do you know when an insurer is acting in bad faith? Making the determination is not always easy, but there are a few warning signs to look out for. Has the insurer failed to promptly respond to your inquiries? Denied a seemingly valid claim? Offered you a settlement that seems unreasonably low? Made onerous requests for documentation? Encouraged you not to contact a lawyer? Taken alone, none of these prove bad faith, but they are indicators that you should be on your guard and seek legal help immediately.
An experienced insurance lawyer can help you sniff out bad faith in an auto liability insurance claim, securing the full recovery you deserve, possibly even in excess of policy limits. If you suspect an insurer has not been dealing with you fairly and in good faith, get in touch with an insurance lawyer today.