Insurance is a risk-transfer mechanism that ensures full or partial financial compensation for the loss or damage caused by event beyond the control of the insured party. Under an insurance contract, a party (the insurer) indemnifies the other party (the insured) against a specified amount of loss, occurring from specified eventualities within a specified period, provided a fee called premium is paid. In general insurance, compensation is normally proportionate to the loss incurred.
Auto insurance is a policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident. Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company, the company then pays all or most of the costs associated with an auto accident or other vehicle damage. It means big profits for the companies that write the policies. The more premiums they take in and the fewer claims they pay out, the greater the profits they generate and profits are what the insurance business is all about.
Importance of buying auto insurance
• Having auto insurance is very important though many people think of it only as a grudge purchase. There is no doubt that having home insurance, life insurance or even business insurance ensures that if things ever do go wrong, you have a safety net. Auto insurance is especially important as this is the most common form of insurance taken for individuals.
• Getting good comprehensive insurance can ensure that should something go wrong, you are covered. It is impossible to predict what may go wrong and thus getting insurance protects you to a certain degree.
• Having insurance for your car equates to having peace of mind and without this peace of mind, you may be driving around over-cautiously, continuously worried about what could go wrong. There is no doubt that insurance is a grudge purchase and that people do not want to allocate their insurance if scenario happen , but sometimes things don’t go as planned.
• If you value your possessions and you have worked hard to buy a car or property and to have a means of transport, you need to insure the car. Though the extra costs every month may mean you need to budget and cut out a few luxuries, this will be well worth it in the long term. Be sure to focus on the bigger picture to ensure that no matter what happens in the future, you are prepared for it. Insurance is your safety net, so make sure it is there before you start to drive.
Understanding Your Auto Insurance Deductibles
If you have ever had full coverage on a vehicle then you may be familiar with the term ‘deductible.’ In short your deductible is the amount of money that you will have to cover in the event you are in an auto accident.
Breakdown of Auto Insurance
Auto insurance premiums vary depending on age, gender, years of driving experience, accident and moving violation history and other factors. Most states mandate that all vehicle owners purchase a minimum amount of auto insurance, but many people purchase additional insurance to further protect them. A poor driving record or the desire for more complete coverage will lead to higher premiums. However, you can reduce your premiums by agreeing to take on more risk, which means increasing your deductible. In exchange for paying a premium, the insurance company agrees to pay your losses as outlined in your policy.
• Property – damage to or theft of your car
• Liability – legal responsibility to others for bodily injury or property damage
• Medical – costs of treating injuries, rehabilitation and sometimes lost wages and funeral expenses
In Utah, Policy terms are usually six- or 12-month timeframes and are renewable. An insurer will notify a customer when it’s time to renew the policy and pay another premium.
Why Auto Insurers Exist
If you’ve been laboring under the illusion that insurance companies exist to pay your damages when you’ve been injured by their insured, to protect you from liability claims filed against you, or to pay uninsured motorist claims when you’ve been injured by an uninsured or underinsured driver, being involved in a car accident may prove to be a wake-up call. Writing policies and banking the premiums is the easy part of the insurance business, but paying on claims is not what they do best.
Paying claims digs into their profits therefore , Ignoring low-balling, unreasonable blame shifting, and outright denial of valid claims are just a few of the ways that many auto insurance carriers attempt to keep those premiums safe within their coffers for the benefit of the shareholders who pay their salaries not to mention bonuses. These nefarious tactics can create problems for those who are injured by their insured, by their policy- holder who was injured by an uninsured driver, or for their policy- holder who was at fault for an injury or wrongful death accident. When an insurance carrier fails to pay a fair amount on a legitimate claim, the result can be financial disaster for the injured. If they stall, deny, and “low ball”, a claim that deserves to be settled and the case goes to trial, resulting in a verdict against their policy-holder that exceeds the value of the policy, their insured can be left responsible for the balance.
Insurance companies often get away with these tactics because so many people don’t realize that they are not powerless against the powerful corporate insurance giants. In fact, when you have been a victim of insurance company bad faith, you often have recourse and can force them to live up to their legal obligation to pay. In most cases, they will have to pay for your attorney fees on top of your damages, and in some cases, you may even be awarded punitive damages as a punishment to remind them that acting in bad faith is unlawful, immoral, and unjust.
Potential Victims of Auto Insurance Bad Faith
Potential victims of insurer bad faith include:
• Accident victims making liability claims
• Holders of no-fault insurance, where applicable
• Accident victims injured by a driver without adequate liability insurance.
• Holders of liability policies whose companies fail to settle a valid claim
• Holders of liability policies whose carriers fail to adequately defend them against claims
Auto Insurance Bad Faith
Bad faith insurance refers to an insurer’s attempt to renege on its obligations to its clients, either through refusal to pay a policy-holder’s legitimate claim or investigate and process a policy-holder’s claim within a reasonable period. Insurance companies act in bad faith when they misrepresent an insurance contract’s language to the policy-holder to avoid paying a claim. They also act in bad faith when they fail to disclose policy limitations and exclusions to policy-holders before they purchase a policy, or when they make unreasonable demands on the policy-holder to prove a covered loss.
All states require their drivers to have auto insurance or a financial responsibility equivalent in order to become a fully licensed vehicle operator. There are several levels of auto insurance coverage that you can purchase to protect both you and your vehicle. However, following an auto accident, your insurance company may refuse to pay for these contracted services. This is called insurance bad faith.
First, when you sign with an insurance company, you choose the plan that you want then pay a premium to cover this protection. Thus, you enter into a contract with your insurance provider to pay your premium in return for their financial backing should damage occur. Insurance companies are very specific about the extent of damage that they cover, and this is why you can layer different levels of coverage.
Fighting Bad Faith Insurance
State laws that specifically address bad faith practices also called unfair claims practices acts, are meant to protect customers against malicious behaviors by insurance companies. Some laws require an insurance company acting in bad faith to pay basic damages to help compensate the victim for having a claim denied, above and beyond the amount owed under the claim. This compensation covers not only out-of-pocket expenses or borrowed funds to address damage, but also missed work and attorney’s fees.
If an insurance company acts particularly egregiously, a jury may award punitive damages to the policy-holder to punish the insurance company for its wrongdoing and to discourage it from acting in bad faith with other policy-holders. If the insurance company simply makes a mistake and has not acted in bad faith, the proper remedy is only to pay the claim.
Being injured or suffering property damage is difficult enough. It’s even worse when your insurance company doesn’t live up to their end of the contract. Your insurance company is required to investigate, negotiate, and settle claims in good faith. When this duty is violated, the insurance company can be liable in court for their bad faith actions.
A common law claim requires proof that the insurer’s conduct was unreasonable and that the insurer knew or recklessly disregarded the fact that its conduct was unreasonable. A statutory claim may have a lower standard of proof, only requiring proof that a benefit to which the insured was entitled under the policy was unreasonably delayed or denied. These are;
• Unreasonable Delays
An insurance company may drag out the time it takes to investigate a claim before agreeing to pay. This tactic is done to see if the policy-holder will just give up pursuing the claim. In Utah, a deadline for an insurance company to accept or deny a claim is from 15 to 60 days.
• Failure to Conduct a Complete Investigation
Every insurance policy contains an implied duty of good faith and fair dealing. This requires an insurance company to conduct prompt and thorough investigations in to a policy-holder’s claim.
• Deceptive Practices
An insurer could fail to disclose the existence of coverage so they don’t have to pay you. Your insurance company fails to notify you of a claim filing deadline and doesn’t provide the papers necessary for you to complete your claim on time.
• Offering Less Money than a Claim Is Worth
Insurance companies can’t avoid paying a valid claim to bolster their own profits. Tactics such low-balling or offering less money than a claim is an act of bad faith.
• Misrepresenting the Law or Policy Language
Insurance companies may deliberately interpret policy language against the claimant. A part of the duty of good faith and fair dealing, insurance companies must be truthful in their statements about your policy and the law.
• Refuse to Pay a Valid Claim
Insurance companies are required by state law to only use fair claims practices. If the insurer denies a claim that should be covered by the policy, this action could qualify as bad faith. . An insurance company has committed insurance bad faith when they refuse to pay your claim, even when it is due under your policy.
• Making Threatening Statements
An insurance company should never make a threatening statement to policy-holders or third parties who are making claims. If an insurance company makes a threat, call your state insurance board or an attorney right away
Other examples of bad faith include situations in which insurance companies delay payments for a long period of time or pay you less than you are entitled to as determined in your policy. However, your insurance company refuses to pay you without telling you why and now and they refuses to respond to your demands, the legal way to do this is to file a bad faith insurance settlement claim against the insurance company. When you file an insurance claim, the insurance company must fulfill its duties by investigating your claim, making a fair deal, and providing reasonable services. If they fail to fulfill their duties as stated in the policy language and by law, you may file a lawsuit for bad faith insurance settlement practice. Specific insurance laws and requirements may vary by state and by insurance companies. Thus, be sure to check your insurance policy language to check if they failed to keep the promises made.
Get Legal Help
If any of the above situations applies to your case, you probably have a valid claim to sue the insurance company for its bad faith insurance settlement practice. Before filing a lawsuit, write a letter claiming bad faith to the insurance company. It may draw the company’s immediate attention, and the company may attempt to resolve the issue. However, if the insurance company fails to fix its bad faith insurance practice, you should consider suing the company.
Attorney for Bad Faith Insurance Claims Free Consultation
When you need legal help with a bad faith insurance claim in Utah, please call Ascent Law for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506