The attorneys at the Law Offices of Gary O. Bruce often hear from clients in east Alabama, Phenix city, ft. Mitchell, Ft. Benning, Smith Station, and all over the state who have been given the “run-around” by the insurance company after an insurance claim involving their homeowners, life, or health insurance policies.
Many potential clients report that they have paid premiums for years on their homeowners policies only to experience many months of delay in getting “their own” insurance company to pay under the policy when a claim arises. Sometimes the insurance company seems to be trying to pay less than what is actually owed under the policy. Other times, the claim is simply denied outright.
Alabama law provide policy holders with legal rights to protect their families from unscrupulous insurance practices. The protection comes from what is known as a “bad faith” claim. In a nutshell, “bad faith” is anytime the insurance company fails to do what it is legally required to do under the insurance policy. Bad faith is the opposite of good faith, which means doing what you are supposed to in the spirit of the contract.
The Alabama courts created the bad faith cause of action because people seeking insurance benefits are generally in need of help. The law punishes insurance companies who exploit claimants while they are down. The bad faith claim puts a legal duty on the company to treat you fairly when you make a claim.
A quick example: imagine surviving a tornado. Your house and everything in it is completely devastated. Your car is under a tree. You are completely vulnerable. You contact your homeowner’s insurance only to receive the run around. You are told that “these things take time,” and it is a month before an agent for the insurance company even comes to look at your property. Finally, an adjuster comes “to help” but then nothing from the company for months. Despite your repeated calls, you can never talk to a live person and you are constantly transferred to so-and-so’s voicemail who never calls you back. When a call finally does come, the answer is “we can’t pay because you had failed to tell us you had a go-cart in your home and we would not have insured you if we had known about that dangerous vehicle”.
This story is not that far from the truth. Fortunately, the bad faith law suit allows a POLICY HOLDER to hold the insurance companies accountable where the claimant can prove that there was no lawful basis to deny the claim OR there is a failure to properly investigate a claim.
Unfortuantely , it is not that easy. Alabama protects the insurance company on typical bad faith claims by imposing a heightened burden of proof on the policy holder. That is, he must go beyond the usual “more likely than not standard”. The successful policy holder bringing a claim must survive a directed verdict and prove that no reasonable minds could disagree as to the conclusion that the insurance company acted in bad faith. Many bad faith claims fail to make it past summary judgment.
The good news is that Alabama has not let insurers off the hook completely, though. There does still exist a very high duty to investigate claims.
Our practical advice for tornado claimants and others who might be dealing with their own carrier trying to recover insurance proceeds includes
1. carefully document all communications with the insurance company,
2. Require any denial to be in writing with the exact reason for the denial with reference to policy language,
3. Document any delay in claim evaluation by certified letter to the insurance company,
4. In your letter ( send certified mail , return receipt requested) state the exact time of delay in evaluating the claim. (e.g., after 30 days you still have not sent an adjuster to evaluate my tornado damaged home),
5. Submit everything possible that can support your claim to the insurer (photos, receipts, etc.) and , finally, keep a copy of everything.
You must put it in writing. Make a paper trail. Do not rely on the conversation you had with anyone being remembered. Follow up every conversation with a letter outlining what was discussed. This will set them up for ignoring your file with indifference.
Of course, if you need assistance, we are happy to discuss your potential case at any time.
