Each year, we pay our insurers thousands of dollars to protect us in case we accidentally injure another driver or a pedestrian. In return, our insurers must put our interests first – not their own – when they evaluate the injured victim’s insurance claim. If your insurer refused to pay a justified claim, you should contact an Atlanta bad faith insurance lawyer.
What Is A Bad Faith Insurance Claim?
A bad faith insurance claim is a claim that an insured person has against their insurer for its misconduct. Insurers owe a duty of good faith to their insureds. If the insurer violates that duty, the insured person (or “policyholder”) may sue the insurer for the harms they suffered.
There are two types of bad faith insurance claims:
1) Third-party bad faith insurance claims; and,
2) First-party bad faith insurance claims.
What Is A Third-Party Bad Faith Insurance Claim?
Your insurer must settle a justified claim against you within your policy’s coverage limits. Otherwise, you may be hit with a judgment that exceeds the coverage limits. If your insurer fails to settle a justified claim within the policy limits, and the injured victim then obtains an excess judgment against you, you can sue your insurer to indemnify you for that excess judgment. That’s known as a third-party bad faith insurance claim.
Here’s an example:
If you purchased $25,000 of auto liability insurance coverage and the injured victim’s claim is worth $25,000, your insurer should pay that claim if you’re liable. If your insurer doesn’t pay that claim, the injured victim might sue you and recover an excess verdict against you.
An “excess verdict” means that there wasn’t enough insurance coverage to pay the verdict. Therefore, the policyholder (you) is responsible for paying the verdict balance. So, if the injured victim won a $500,000 verdict and there was only $25,000 insurance coverage, you have to pay $475,000 to cover the excess verdict. If your insurer had just paid the injured victim’s settlement demand, you would’ve never been in that unfortunate position.
You should contact an Atlanta bad faith insurance lawyer whenever an injured victim obtains a judgment against you. Your lawyer will determine whether you can sue your insurer to cover the judgment you owe.
What Compensation Can I Recover For A Third-Party Bad Faith Insurance Claim?
You may suffer immense harms if your insurer exposed you to an excess verdict. For instance, the injured victim may collect the verdict by:
- Seizing your assets
- Garnishing your wages, or
- Filing a lien on your home
You might have to file bankruptcy. Your credit might be destroyed.
Fortunately, you can sue your insurer to punish their misconduct. Then, your Atlanta bad faith insurance lawyer can help you recover the following compensation:
- Damages equal to the injured victim’s judgment against you.
- Post-judgment interest.
- Compensation for reputational damage, e.g. if your business interests or your reputation were harmed by having a judgment of record filed against you.
- Compensation for mental or psychological injuries that you suffered from having to endure years of litigation, post-judgment discovery and collection efforts, damaged credit, and lost assets.
- Uncapped punitive damages.
- Reimbursement for your attorneys’ fees and costs.
Why Doesn’t My Insurer Just Pay The Third Party Insurance Claim?
Many insurance companies often refuse to settle insurance claims. Why? To save their money – not yours. Each month, when the insurance company receives your premium payment, they deposit it into an account. Then, they invest the account funds in the stock market. The longer your money remains invested in the stock market, the more interest the insurance company earns on your premium.
Insurers must withdraw their stock market funds to pay a claim. Therefore, most insurance companies drag out the claims process. That way, they can earn the greatest amount of interest on their policyholders’ premiums.
That negotiation strategy works if the injured victim has a weak claim. Why? Because if the victim takes their weak claim to trial, it’s unlikely they’ll win a verdict that exceeds the policy limits. However, if the injured victim has a strong claim, they’ll likely win an excess trial verdict. Therefore, insurers must carefully evaluate strong claims and pay them accordingly.
Can I Make My Insurer Pay A Third Party Insurance Claim?
Your insurer should give you a copy of the injured claimant’s demand. If that demand is legitimate, you should urge your insurer to pay it. Your insurance premiums may increase if your insurer pays that demand. However, that’s a much better result than being a defendant in a multi-year lawsuit that might expose you to an excess verdict.
Additionally, you may also hire an Atlanta bad faith insurance lawyer to advise you about any excess verdict risks. Your lawyer might persuade the insurer to pay the claimant’s demand. If your insurer still refuses to pay the demand after your lawyer explains why that will harm you, then you have even more evidence to prove your bad faith claim.
What Is A First Party Bad Faith Insurance Claim?
If you were injured by a hit-and-run motorist or an underinsured motorist, you can submit an uninsured or underinsured motorist claim to your insurer. Your insurer must settle that claim within your policy’s coverage limits. Otherwise, you can sue your insurer for bad faith failure to pay your claim. That’s known as a first-party bad faith insurance claim.
What Compensation Can I Recover For A First-Party Bad Faith Insurance Claim?
Georgia Code § 33-7-11(j) provides that if your insurer acted in bad faith by refusing to pay your settlement demand, you can sue it to recover the following relief:
- The auto insurance policy limits.
- 25% of policy limits as an additional penalty.
- Reasonable attorneys’ fees.
So, if you made a demand for $100,000 policy limits and your auto insurance company acted in bad faith by refusing to pay your demand, you could potentially sue your auto insurer for bad faith and recover the $100,000 policy limits, a $25,000 penalty fee, plus your attorneys’ fees.
Our Atlanta Bad Faith Insurance Lawyers Can Help You
The attorneys at Allen & Scofield Injury Lawyers, LLC have recovered of millions of dollars from insurers that acted in bad faith by refusing to negotiate in good faith. Although it’s devastating when your insurer acts recklessly, the law is on your side. Your insurer burned you once. We won’t let them burn you twice.