At our firm, we often encounter clients dealing with bad faith insurance claims. For many policyholders, understanding their rights and the obligations of their insurers is crucial. At Goodwin Johnston LLC, our attorneys are skilled in helping our clients through these situations and providing guidance on what steps can be taken if a policyholder suspects they’re facing bad faith practices.
Located in Kansas City, Missouri, we serve clients in both Missouri and Kansas with bad faith insurance claims. Reach out to us today to schedule a consultation.
What Is Bad Faith Insurance?
At its core, bad faith insurance refers to an insurer’s failure to uphold its duty of good faith and fair dealing toward policyholders. This duty is foundational to the insurer-policyholder relationship, and when it’s violated, significant distress can ensue. Bad faith can manifest in various ways, including:
Unreasonable denial of claims: We see cases where claims are denied without adequate justification, leaving policyholders in difficult situations.
Delays in processing claims: In many instances, insurers take an excessive amount of time to process claims or provide decisions, which can lead to financial strain for policyholders.
Underpayment of claims: We've encountered situations where insurers pay far less than what's warranted under the terms of the policy, potentially jeopardizing our clients’ financial stability.
Failure to investigate claims: Some insurers don’t conduct thorough investigations into claims, which can result in wrongful denials.
Poor communication: We frequently note that insurers may fail to keep policyholders informed about the status of their claims, further complicating an already stressful situation.
These actions can cause considerable harm to policyholders, prompting the need for legal action to seek recourse against their insurers.
Dealing with Bad Faith Insurance Claims?
The Law in Missouri
In Missouri, the legalities surrounding bad faith insurance is guided by common law principles. While there isn’t a specific statute that exclusively addresses bad faith, the law recognizes the obligation of insurers to act in good faith and fair dealing.
Missouri Statutes
We refer to Missouri Revised Statute §375.296, which emphasizes the requirement for insurers to conduct themselves in good faith. This statute outlines various unfair practices and penalties for insurers who fail to comply. It provides a foundation for pursuing claims against insurers that engage in bad faith practices.
Case Law
Missouri courts have shaped the understanding of bad faith through various rulings. A notable case, Woods v. State Farm Fire & Casualty Co., reinforces the need for insurers to conduct reasonable investigations before denying claims. When we present a bad faith claim in Missouri, we often cite such cases to establish that the insurer's actions were arbitrary or capricious.
Burden of Proof
In Missouri, the burden of proof lies with the policyholder. We guide our clients to gather evidence demonstrating that the insurer acted in bad faith and that their claim denial or mishandling was unreasonable.
The Law in Kansas
In Kansas, the duty of good faith and fair dealing is similarly recognized. Here, the law also provides mechanisms for policyholders to pursue claims against insurers for bad faith.
Kansas Statutes
Kansas Statute K.S.A. §40-2404 outlines various unfair trade practices in insurance, prohibiting misleading advertising and requiring timely claim handling. This statute serves as a basis for establishing bad faith claims, emphasizing the insurer's obligation to act fairly.
Case Law
In Kansas, significant cases like Couch v. Nationwide Mutual Insurance Co. have set important precedents. These cases emphasize that insurers must conduct thorough investigations and act reasonably when handling claims. We often reference these rulings to support our clients’ claims of bad faith, especially in cases where there’s a legitimate dispute over coverage.
Burden of Proof
Similar to Missouri, the burden of proof in Kansas rests with the policyholder. We encourage our clients to present evidence that showcases the insurer's unreasonable actions and the resultant harm.
Common Bad Faith Practices
Recognizing common bad faith practices can empower policyholders to identify when their insurers aren’t fulfilling their obligations. Here are some of the most prevalent insurance law practices we encounter:
Unreasonable Denial of Claims: It’s not uncommon for insurers to deny valid claims without sufficient evidence. For instance, we’ve seen homeowners denied for storm damage claims based on insufficient inspections, which raises serious questions about the insurer's good faith.
Failure to Investigate: We advise our clients that insurers are required to perform reasonable investigations when insurance law comes into question. When an insurer overlooks supporting evidence or fails to thoroughly investigate a claim, it can be a clear indication of bad faith.
Undue Delays: Timeliness is critical in claims processing. We have often witnessed insurers delaying claims unnecessarily, which can exacerbate the policyholder's situation, leading to further financial difficulties.
Underpayment of Claims: Insurers may sometimes offer payouts that fall short of what is rightfully owed under the policy. This practice can be seen as a tactic to minimize costs, potentially constituting bad faith if done without justification.
Poor Communication: Effective communication is essential in the insurer-policyholder relationship. When insurers fail to respond to inquiries or provide misleading information, it can further complicate an already challenging situation and contribute to a finding of bad faith.
Steps to Take If You Suspect Bad Faith
If a policyholder suspects they’re facing bad faith practices from their insurer, there are several proactive steps we recommend taking:
Document Everything: We always emphasize the importance of thorough documentation. Keeping detailed records of all communications with the insurance company—emails, letters, and notes from phone calls—can provide invaluable evidence in a bad faith claim.
Review Your Policy: Understanding the terms of the insurance policy is crucial. We guide our clients to carefully review their coverage to identify whether the insurer’s actions are indeed unreasonable or unjustified.
File a Complaint: We encourage policyholders to file complaints with their state insurance department. In Missouri, this is the Missouri Department of Insurance, and in Kansas, it’s the Kansas Insurance Department. These agencies can investigate insurance law complaints and may provide additional support.
Consult an Attorney: If a policyholder believes they have a valid claim, consulting with an attorney experienced in insurance law is essential. We can help evaluate the case, understand rights, and work through the intricacies of the legal process.
Consequences of Bad Faith
The implications of bad faith insurance practices extend beyond individual policyholders. When insurers engage in bad faith, it can lead to increased premiums for all policyholders, as insurance companies may adjust rates to cover losses incurred from litigation. Moreover, a pattern of bad faith can significantly damage an insurer's reputation and erode trust among policyholders.
Potential Damages
If we successfully prove a bad faith insurance claim, policyholders may be entitled to various damages, including:
Actual damages: The value owed under the insurance policy.
Consequential damages: Additional costs arising from the insurer’s bad faith actions, such as loss of property or income.
Emotional distress damages: Compensation for mental anguish caused by the insurer’s conduct.
Punitive damages: In cases of egregious behavior, courts may award punitive damages aimed at punishing the insurer and deterring future misconduct.
Speak to a Kansas City Attorney
Our role as attorneys is to empower policyholders to receive protection under their insurance policies. Contact our experienced personal injury attorneys at Goodwin Johnston LLC today if you need representation in Missouri, including Kansas City, St. Joseph, Springfield, Columbia, and St. Louis, or in Kansas, including Kansas City, Lawrence, Manhattan, Wichita, and Topeka,