Some insurance companies seem to view their customers—the “insureds” who have purchased policies from them—more as enemies than people to whom they owe a duty. Large insurance companies may go as far as to reward the people who work in the claims handling area—claim managers, adjuster, etc.—for minimizing the amount of money they pay out on claims.
But the insurer’s conduct doesn’t have to be anywhere near that blatant to harm the insureds that have paid premium after premium for insurance protection that the insurer may ultimately deny them in order to save money.
Insureds Can Sue for Bad Faith
Kentucky provides insureds who have been harmed by this kind of “bad faith” the right to sue the insurer for bad faith. That right started out with a court decision (“common law”) and has been augmented with specific statutes that spell out what an insurer cannot do.
Unlike many other states, Kentucky provides a fairly narrow right to sue, requiring that suit can only be brought if the insurer:
- Is obligated to pay the claim under the terms of the policy
- Lacks a reasonable basis “in law or fact” for its decision to deny the claim
- Either knew there was no reasonable basis for the denial or denied the claim in reckless disregard of whether there was a reasonable basis
The last requirement really is stringent, and makes the assistance of an experienced Kentucky bad faith attorney especially valuable.
Specific Actions that Show Bad Faith
Kentucky’s Unfair Claims Settlement Practices law lays out a long list of acts and behaviors that are considered indications of bad faith by insurance companies. Among them are:
- Failing to pursue a good faith effort to reach a prompt, fair and equitable claim settlement after the insurer’s liability has become reasonably clear
- Not adopting and implementing reasonable standards providing for prompt investigation of claims
- Denying claims which haven’t been reasonably investigated
- Failing to decide the claim within a reasonable time after receiving completed proofs of loss
- Misrepresenting facts or policy terms pertinent to the claim
- Failing to acknowledge and act reasonably promptly upon communications with respect to claims
- Telling insureds that the company has a policy of appealing from arbitration awards in favor of insureds, in order to compel settlement for less than the arbitration award
Proving any of these is difficult and requires knowing where the necessary evidence is likely to be. That’s the value of having an experienced bad faith attorney.
Bad Faith Damages
The standard for proving bad faith is very stringent but, if the insured can, the damages available are well beyond those to which the insured was entitled under the terms of the insurance policy. The most obvious damages are economic: lost revenue and profits, the cost of borrowing funds needed because the insurer didn’t pay, and so on.
The insured may also be able to obtain damages for anguish and mental suffering, attorney fees and interest.
Because Kentucky allows bad faith claims only when the insurer’s bad faith has been shown to be intentional or reckless, any insured who meets the requirements for bringing the bad faith action also meets the standard for punitive damages.
Get the Experienced Help You Need
The bad faith standard is stringent, but can be met with the help of an attorney who really understands both the quirks of Kentucky bad faith law and how insurance companies operate. We have a very long track record of successfully obtaining bad faith damages and settlements. Our extensive knowledge of insurance company claims settlement practices, including where the evidence of bad faith is likely stored, goes a long way toward restoring our clients’ rights and redressing their injuries. Call us at Surrano Law in Phoenix if you have serious doubts about your insurer’s conduct and motives, in Arizona or anywhere else in the nation.