Recognizing Bad Faith Insurance in Indiana and Understanding Your Next Steps
Category: Personal Injury
Article by Heath A. Tuley
As a policyholder, you could pay for insurance your whole life without ever making a claim. Since insurance companies make money by paying less in claims than the amount they get in premiums, insurers make significant profits on claim-free customers.
Unfortunately, insurers can make even more money if they underpay or deny legitimate claims, incentivizing them to treat policyholders unfairly.
The good news is that any insurer found to be guilty of bad faith—engaging in dishonest or underhanded tactics with policyholders—can be ordered to compensate victims for their negligence and its undue hardships. Our personal injury lawyers want you to know how to spot bad faith tactics, what evidence you need to prove it, and how we can help you remedy the situation.
What Is Bad Faith Insurance in Indiana?
Bad faith insurance in Indiana, as in most other states, refers to an insurance company acting dishonestly, unfairly, or unreasonably in handling a policyholder’s claim. In the 1992 case Erie Insurance Co. v. Hickman, the Indiana Supreme Court established four specific actions that constitute “bad faith” on the part of insurers:
- Wrongfully denying a legitimate claim
- Causing an unfounded delay in issuing payment
- Deceiving the insured
- Exercising an unfair advantage to force the insured into a settlement
In addition to these actions, the state recognizes other forms of bad faith insurance practices in Indiana, such as:
Unreasonable Denial of Claims
An insurance company unreasonably denying a legitimate claim without a valid reason might be considered bad faith. This form of bad faith includes denying a claim without a thorough investigation or a clear explanation.
Delayed Claims Processing
Payment delays usually cause financial hardship to the policyholder. Delaying claim processing without reasonable cause could indicate an insurance company is acting in bad faith.
Underpayment of Claims
When an insurer offers a settlement significantly lower than the claim’s value and refuses to negotiate or provide a reasonable explanation for the low offer, it may be considered bad faith.
Misrepresenting Policy Terms
It’s bad faith for an insurance company to provide false information, mislead the policyholder about their coverage, or otherwise misrepresent the policy terms to avoid paying a claim.
Failure to Investigate
Insurers must perform reasonable investigations of all claims. Failing to conduct a proper investigation or conducting a biased one could indicate that they are acting in bad faith.
Failed Communication
Bad faith can result from an insurer’s failure to communicate timely or essential information, provide reasonable explanations, or repeatedly demand the same documentation.
Rescission of Policies
Suppose an insurance company cancels a policy after filing a claim without a legitimate reason or proper notice. In that case, it may be considered bad faith.
What Are the Consequences of Bad Faith by an Insurance Company in Indiana?
Actions constituting bad faith by an insurance company can have a devastating impact on victims, who are often left in a vulnerable and financially precarious situation. Some of the consequences of bad faith on victims include:
Financial Hardship
Victims of bad faith may be left to cover expenses that should have been paid by the insurance company, including medical bills, property repair or replacement costs, and other related expenses.
Emotional Distress
Dealing with a bad faith insurance company can be highly stressful and emotionally taxing. Victims may experience anxiety, frustration, and depression as they fight for their rightful insurance benefits.
Health Complications
In cases where medical insurance claims are denied in bad faith, individuals may postpone or forgo necessary treatments or procedures, which can negatively impact their health and well-being.
Damage to Credit
Unresolved insurance disputes can result in unpaid bills, collections, and damaged credit scores, which can have long-term financial consequences for victims.
Bankruptcy
In extreme cases, victims of bad faith insurance may face overwhelming financial burdens that lead to bankruptcy or foreclosure.
What Are the Remedies for Bad Faith Insurance in Indiana?
Insurance companies have a legal obligation to evaluate, process, and settle claims under the terms of the policy. Policyholders could collect considerable damages when an insurance company fails to hold up its end of the bargain.
Indiana’s bad faith insurance law makes legal remedies available to individuals who believe they are victims of bad faith insurance practices. A lawsuit to recover damages from the insurance company could provide the policyholder with the original claim amount, consequential damages, or punitive damages meant to punish the insurer.
To recover damages, a victim must be able to provide evidence of the insurer’s conscious wrongdoing. In other words, you must prove that the insurance company did something it knew was wrong.
Evidence That Could Be Useful in Establishing Bad Faith Insurance
Correspondence
Save all written communication with the insurance company, including emails and forms related to the claim.
Claim Documents
Maintain copies of your claim forms, receipts, invoices, and supporting documentation.
Witness Statements
Where applicable, gather statements from witnesses who can attest to the insurance company’s unfair practices.
Complaints
If you filed a complaint with the Indiana Department of Insurance, keep a copy of the complaint and all related correspondence.
Expert Opinions
In some cases, you may need experts, such as medical professionals or contractors, to provide opinions about the validity of your claim or the insurance company’s actions.
Internal Documents
Insurance companies’ internal memos, emails, or documents may sometimes reveal their bad faith actions. Your attorney can help with discovery to obtain such records.
How Can a Lawyer Help With Bad Faith Insurance in Indiana?
Victims face overwhelming hardships due to bad faith insurance tactics. You might think twice about getting the medical care you need or face daily calls from debt collectors due to unpaid bills. You may also be unsure about filing a lawsuit against your insurer, assuming it’s one more headache you don’t need—or a battle you couldn’t win.
The truth is that winning these kinds of cases is possible—but you should never attempt to go up against the insurance company on your own. You need someone who knows the laws and regulations governing insurance in Indiana, the time limits on these claims, and the many ways insurers attempt to evade their duties to policyholders.
Our experienced attorneys handle the legal matters in your claim, and we also help to ease your burden any way we can while your case is pending, such as:
- Sending a letter of protection to allow your continued access to treatment
- Gathering sufficient evidence to build a case against your insurer
- Negotiating with insurers on your behalf
- Calculating the benefits owed to you and potential punitive damages
- Explaining your options every step of the way
If you have suffered from bad faith insurance practices in Indiana, simply fill out our contact form to speak with our lawyers. Your call is free, and we can explain your options at no cost to you.
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