Bad Faith Claims Against Insurance Carriers: The Great Equalizer

When an insurance claim has been denied, a critical first step for businesses is to consider whether or not the insurance carrier acted in bad faith.  As Miles Karson discusses in today’s video, bad faith claims against insurance carriers are the “great equalizer,” leveling an otherwise unequal playing field between insurer and policyholder.  Policyholders rely on their insurance carriers to promptly and fairly evaluate their claims for insurance.  Unfortunately, insurers don’t always live up to their end of the bargain.  When properly used, bad faith claims create leverage, leveling the playing field, and open the door to full recovery.  A successful bad faith claim brings with it the potential to recover policyholder coverage counsel fees, as well as tort-based and punitive damages.

Many Insurance Claim Denials Are Made in Bad Faith

An important thing for policyholders to remember is the vast majority of high-end insurance recovery practices cannot pursue bad faith claims against insurers.  A dirty little insurance industry secret is that most law firms – whether AmLaw 100 or smaller – cannot pursue bad faith claims against insurers.  Sometimes, this is because of actual conflicts of interest.  Other times, insurers require utmost loyalty from their stable of defense panel law firms.  For example, many larger law firms have agreements with insurance companies whereby, in exchange for being added as panel counsel to insurance policies, those firms agree not to assert bad faith claims against insurers.  Given the steady diet of insurer-referred work these panel counsel relationships provide, giving up bad faith claims against an insurer may be viewed, by these law firms, as a minor concession.   Finally, many larger law firms have policies prohibiting lawyers from pursuing bad faith lawsuits.  The result is that, by drastically limiting the number of high end large law firm lawyers who can pursue bad faith claims against them, the  insurance industry has effectively insulated themselves from bad faith liability.  This ensures that the playing field remains tilted in their favor, that is, unless you retain a law firm that is capable and adept at handling corporate bad faith insurance claims. 

How Does Our Focus On Insurance Recovery Law Relate To Bad Faith Claims?

Miller Friel, with our singular focus on insurance recovery law, is not bound by any of the standard insurance industry prohibitions against pursuing bad faith claims.  Our absolute freedom from insurance carrier restrictions gives us flexibility, not only in litigation, but also in settlement.  When warranted, we can aggressively pursue insurance recovery claims, including bad faith, to obtain the maximum recoveries possible for our policyholder clients.  We can also utilize bad faith as part of an overall recovery strategy that affords policyholders the opportunity to recover the full amount of their losses, or more. 

 To learn more about how we have used integrated bad faith strategies to drive insurance recovery settlements, please give us a call.

Here’s a transcript of the video:

Understanding of bad faith claims also known as the great equalizer.

Bad faith claims can be the great equalizer. Because with bad faith claims come a potential for tort damages and punitive damages. They make the insurer focus more on your claim. They can create settlement leverage they also bring into play coverage counsel’s attorney fees. Bad-faith damages are often times the only way to make an insurer whole to secure the benefit of the insurance policy purchased and to deter the insurer bad faith contact going forward.

Key factors to consider in analyzing and evaluating whether or not ensures have engaged in bad faith conduct.

There are some key factors to consider in analyzing or evaluating whether or not the insurer has engaged in bad faith conduct. The first thing is to retain coverage counsel that can objectively analyze and evaluate the insurers whether not the insurer have engaged in bad faith conduct. Something that often times goes unsaid is that many major law firms whether AMLAW 100 or smaller cannot bring bad faith claims against insurers. The reason why is because potential conflicts of interest. A lot of major law firms have existing relationships with insurance companies and agreements with insurance companies that in exchange for being identified as panel counsel on their panel counsel list, those law firms agree not to bring bad faith claims against those insurers on behalf of their policy holder clients. Miller Friel is unique in that we don’t have that conflict you can be assured that we evaluate every claim, analyze every claim with an eye towards whether or not your insurer has engaged in any sort of bad faith conduct. If you have any doubts about your coverage counsel’s ability to objectively evaluate and analyze whether your ensures conduct meets the bad faith threshold. Ask them whether or not they have in fact analyzed or evaluated that conduct. If you get any response indicating that your coverage counsel is either reluctant to or bring up a bad faith claim or can’t articulate a reason why, is a red flag.

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