Learning how to file a bad-faith insurance claim can help ensure that you are not taken advantage of by your insurance company during a difficult time. With Wallace Law, you are not alone in the fight. Our bad-faith insurance lawyers are ready to assess the situation, build a strong claim, and stand up for your fair compensation.
What Is a Bad Faith Insurance Claim?
Bad faith denials are unethical insurance practices designed to save the company money. An insurance company acting in bad faith essentially reneges on their contract to the insurer and denies or delays their claim for no honest reason. Insurance companies have a financial incentive to act in bad faith, but they also have a preexisting relationship with their insureds. You hold a contract with an insurance company before the accident, weather event, or injury ever takes place. This relationship means that you, as the policyholder, have the right to good faith and fair dealings with your insurance company under Wisconsin law should you need to make good on your contract with them.
An insurance company is essentially banking on the fact that most policyholders will never have to receive a substantial payout. In order to remain profitable, it is in the company’s best interests to keep disbursements low. Because of this, it is unfortunately likely that a company will act without an honest or actual reason to avoid paying you the full amount that you are owed. When they do so, they act in “bad faith” and can be held accountable with an insurance dispute lawsuit.
Signs that Your Insurer May Be Acting in Bad Faith
Some of the most common warning signs that your insurance company may be acting in bad faith include:
- Unnecessary delays: Under Wisconsin Statutes section 628.46 (timely payment of claims), your insurance company has 30 days to either pay or deny your claim once it has been filed. The entire investigation period should take place within this timeline. If you are not hearing back from your insurance company, it may be a sign that they are acting in bad faith and may also be able to be held accountable for additional interest on your claim.
- Lowball insurance settlement offers: Insurance payments are not meant to be a negotiation. If your company is offering you a lower amount than your policy amount entitles you to get you to “settle”, then they may be acting in bad faith.
- Holding funds hostage: Insurance companies know that when you file a claim, it is usually during a difficult circumstance when you need money the most. After an accident, storm, or loss of a loved one, usually fighting for the full amount you are owed is the furthest thing from your mind. An insurance might attempt to take advantage of this and hold funds hostage. They can refuse to pay the full amount, or offer a lower offer, and then refuse to pay even if you do not accept it. Both of these are examples of bad faith practices.
- Expert shopping: Say that you have significant storm damage to your roof, and the insurance company sends an investigator out to examine your claim. However, you never receive a copy of their report, and soon a second “expert” is sent out to conduct another examination. This second investigator says that a significant amount of the damage was preexisting, and you never see a copy of the first investigator’s report. This is an example of expert shopping, or finding an investigator who will hold to the party line and support the company’s interests over your legitimate needs.
- Examinations under oath: There is no need to submit to direct examination with an insurance company’s attorney for most routine claims. Any company that attempts to have you swear under oath and undergo a question and answer may be attempting to intimidate you into backing down from your claim.
Procedural difficulties: If your company is asking you to provide proof of loss for expenses that you are not qualified to estimate, asking you to find and file obscure documents, or harassing or threatening you with legal action, they may be acting in bad faith. Having your customers jump through hoops to intimidate them with bureaucratic difficulty is not good-faith treatment.
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How to File a Bad Faith Claim Against an Insurance Company
To prove a bad faith claim, the plaintiff will have to show:
- The absence of a reasonable basis for denial of benefits.
- That the insurance company knew of or recklessly disregarded the lack of reasonable basis for denial of benefits.
Proving both of these points is the role of a bad-faith insurance dispute lawyer. Contacting an attorney early on gives them the best chance possible to build a strong case, assemble evidence that supports your claim, reach out to additional experts if necessary as witnesses, and file on time. When working with a bad-faith attorney, they will:
Step 1: Review Your Policy Thoroughly: Your attorney can conduct an in-depth review of your insurance policy to understand the extent of your coverage. They can ensure that you have not waived certain rights and identify ambiguous terms or limitations in the policy language that the company will be banking on to help deny your claim.
Step 2: Gather All Documentation: Your case will need to include detailed records of interactions with your insurer. Your attorney can also advise you about how to handle calls and emails with insurance adjustors who may be trying to get you to admit fault or back down from your claim.
Step 3: Try to Resolve Claim Denial Directly With the Insurer: It may be possible to resolve your issue out of court with a negotiation directly with adjusters. Your attorney can reach out to the insurance company’s higher-ups and request a fast and effective resolution to the matter. You will be kept in the loop for all interactions with your policy adjustor, but will not need to take point on negotiations any longer. Having a trained legal expert call on your behalf often leads to a swifter and better resolution than acting on your own.
Step 4: File an Insurance Complaint With the OCI: Filing a complaint with the Wisconsin Office of the Commissioner of Insurance helps document the issue as well as alert regulators to bad faith concerns.
Step 5: File a Bad Faith Insurance Lawsuit: Most cases settle out of court. However, you will need to leave time to file a lawsuit before the statutory deadline expires. In Wisconsin, most claims must be filed within one year of the loss. Because of this shortened timeline, if your insurance adjustor is dragging their feet on your claim, it is best to reach out to an insurance dispute attorney as soon as possible to make sure you keep the option open to file a bad faith insurance lawsuit.
Bad Faith Insurance Lawsuit 70/9
A bad faith lawsuit moves through several stages before completion. Working with a bad-faith attorney means you are not on the hook to handle each of these elements alone.
- Case Evaluation and Evidence Collection: A crucial role of an insurance dispute lawyer is to build the strongest possible case from the start. To do so, they will parse through your insurance contract, review applicable case laws, sift through correspondence with your insurer, and examine any history of denials by the company in similar situations.
- Filing: Filing your lawsuit in civil court in Wisconsin must be done within one year from the date of loss, and must follow all relevant filing procedures.
- Service of Process and Response: After your complaint is filed, the insurance company has a set period of time in which to respond. During this time the key elements of their defense will be solidified.
- Discovery and motions: Both sides exchange evidence, interrogations, and motions to address issues and disputes that may arise throughout the case for a period pre-trial.
- Mediation: Most insurance dispute cases are settled during the mediation period before they reach the courtroom. This alternative dispute resolution process can help you reach a fair settlement while saving costs and time. The key is to work with a skilled attorney as a negotiator who can stand up to insurance company evasions and defenses.
- Trial Preparation: Should a settlement fail to be reached, both sides of attorneys will move into preparation for trial. This can take a period of several weeks to finalize exhibits, assemble a witness list, and solidify strategy.
- Trial and appeal: The trial process will conclude with a decision from a judge about the outcome of your case. After this, both parties may have the option to appeal if there are outstanding issues.
The Wisconsin insurance dispute attorney who handles your case will understand and be an expert in every element of this process. They will know how to present your claim skillfully and negotiate hard for every dollar they can win you.
How Much Is a Bad Faith Claim Worth?
Bad faith insurance settlements vary depending on the facts of the case, as well as the amount of the initial claim. Besides being ordered to pay the full amount you are owed from your policy, an insurance company can also be ordered to pay damages for your emotional distress if they use certain abusive or inappropriate bad faith tactics, punitive damages, and attorneys’ fees.
How Long Does a Bad Faith Lawsuit Take?
A bad faith lawsuit timeline depends largely on the court schedule and how swiftly you begin the process. However, other factors such as the insurer’s response, expert witness schedules, and other complexities in gathering evidence can also affect the duration. You should expect several months before the matter is fully resolved.
Tips for Successfully Filing a Bad Faith Insurance Claim
Bad faith claims against insurance companies are no easy matter, but working with a skilled Wisconsin insurance attorney can help. We recommend staying organized throughout your case, and keeping detailed paper records whenever possible of communications with your insurer. Avoid social media discussions of the matter, and give out as little information as possible about the case without first discussing it with your attorney.
How to File a Bad Faith Insurance Claim: FAQs
Still have questions about bad faith insurance claims? The following are some FAQs.
Can I File For Bad Faith If My Claim Isn’t For a Big Amount?
Bad faith insurance practices can happen with even small amounts in dispute. Insurance companies might attempt to hold onto every dollar and unreasonably deny even a small claim. Wisconsin small claims court accepts issues for $10,000 or less.
Can Suing an Insurance Company Result In Increased Premiums?
Wisconsin insurance laws Ins 6.85 protects your right as a consumer to file a complaint with state regulatory agencies. The Unfair Settlement Practices Act is designed to promote fair and transparent practices between insurance companies and their customers, even in the event of a dispute. Filing a lawsuit should not result in increased premiums moving forward.
How Much Does a Bad Faith Attorney Cost in Wisconsin?
At Wallace Law, our services are free unless we win. You do not need to pay upfront for representation from one of our expert bad-faith insurance claim attorneys. We ask for our fee from the result of your settlement once we win.
Insurance Company Acting In Bad Faith? Contact Wallace Law to Fight Back
No insurance dispute lawyer can promise a certain outcome. However, the past results at Wallace Law speak for themselves. We have decades of experience in negotiating and navigating insurance disputes. We know how insurance companies think, the tactics they use to respond, as well as the ways in which the law is on your side.
At Wallace Law, our Wisconsin insurance lawyers are trained to parse through intimidation, harassment, unnecessary hurdles, and anything else that an insurance company acting in bad faith throws your way. We stand up by your side and bring our legal expertise to bear to help you recover the amount to which you may be entitled. Contact us for a consultation today. With Wallace Law, you don’t pay unless we win.
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