What proof is required in a bad faith claim against an insurance company?

by Mandy Hicks

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Bad Faith claims against a person’s insurance company occurs when the insurance company isn’t negotiating fairly with its customers. These claims are often when someone feels they are not getting a settlement offer that’s close to what it should be, or sometimes used when someone feels their insurance company isn’t paying a claim that it should. Insurance companies are legally required to negotiate fairly – in good faith – with its customers.

It’s hard even for an experienced attorney to prove exactly what a valid bad faith claim is. How do you prove a person’s, or company’s, intention? Such cases demand an experienced attorney.

A recent Kentucky Court of Appeals case helped set standards for bad faith claims. The case of Samantha Hollaway v. Direct General Insurance Company of Mississippi Inc. involves a parking lot collision in Lexington, Kentucky. Hollaway alleges another driver backed out of a parking spot and hit her; the other driver says Hollaway hit him. Hollaway received a check for damages to her car from Direct General, which amounted to less than $500. She also wanted $125,000 in medical damages, or up to the limit of the other driver’s insurance policy. The insurance company reviewed the case and offered $5,000, based on medical records that indicated she had some damage to her back but she also had pre-existing back problems. The insurance company indicated it was not sure if the damages were the result of the accident or were from previous problems.

Hollaway was not satisfied with the offer, and instead filed suit against the other motorist and Direct General. The insurance company offered Hollaway $22,500. Hollaway filed a bad faith claim against the company. Her argument was that she was not offered the higher amount until she filed suit and that the insurance company negotiated in “bad faith” with her.

Her bad faith claim was dismissed on summary judgment and affirmed by the Court of Appeals as she failed to meet her burden of proof for a bad faith cause of action. The court found a number of problems with Hollaway’s bad faith claim. First, an “expert witness” in bad faith litigation was used in her case, but the information he submitted was not properly certified. The information could not be classified as an affidavit, and was not subject to the rigorous examination typically used on expert witnesses in court cases. Second, she had a “fundamental misunderstanding” of bad faith litigation, the Court of Appeals said. Bad faith claims are pursued when there is no doubt as to the liability in a case and the facts are not in dispute. The only dispute is the amount of settlement.. In Hollaway’s case, neither side would admit fault; both blamed the other driver.

In Kentucky, the Court of Appeals notes, payment of settlement does not indicate legal liability or admission of fault. The Court of Appeals affirmed the lower court’s dismissal of the bad faith claim.

Bad faith claims can be made successfully against insurance companies. Our firm has handled many such cases. If you have been injured in a car accident or have suffered property damage and you believe your insurance company is not negotiating fairly with you, you should speak with a qualified attorney. We will be happy to talk to you about your potential case. Contact our experienced attorneys at (270) 781-6500 or through the contact us form on our web site.

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