When drivers purchase car insurance, they expect that they are paying for protection in the event of an automobile accident. Sometimes, however, insurance companies might do everything they can to not pay when a legitimate claim is presented. In some cases, an insurance company might make what is known as a “bad faith claim” and refuse a claim under the policy. In times like these, you might think that there is nothing you can do. Fortunately, the law provides some protections to people who have been victims of bad faith claims.
What is a Bad Faith Claim?
A bad faith claim is more than an insurance company’s refusal to pay a claim. A bad faith claim occurs when an insurer has been informed that it has a duty to settle for the policy limits, and refuses to do so. Some examples of bad faith claims include when the insurer:
- fails to handle a claim in “good faith”
- denies coverage on an active policy
- delays payment of an insurance claim
- pays out only a portion of the claim
- fails to make a good faith offer settlement.
While these are some examples of bad faith claims, most bad faith claims can be split into one of two different categories. The first type of bad faith claim is the first-party claim, which involves the insured party suing the insurance company for failure to settle a claim. The second is known as a third-party claim, which involves the insured seeking indemnification from a third party. Even though a victim of a bad faith claim can bring the case to court, South Carolina law allows victims to send a demand letter in order to resolve the case. This method is known as the “Tyger River” doctrine, and provides that, if there is a bad faith claim, and the plaintiff to an injury case wins, then the insurance company would be liable for the entire award amount, regardless of how much it exceeds the policy limits.
In order to establish a bad faith claim, a victim of a bad faith claim must first show four things:
- That a contract existed
- That the insurance company refused to pay benefits due under the contract
- hat the refusal resulted from the insurer’s bad faith or unreasonable action in breach of the implied
- Covenant of good faith and fair dealing
- That the refusal caused damage to the insured.
While proving the claim can go a long way to getting a recovery, the courts will still need to analyze the case to determine what kind of recovery will be appropriate.
In South Carolina, a victim of a bad faith claim may bring an action against the insurance company, and may receive damages, as well as attorney’s fees from the case. Damages that may be recovered can include the policy amount that should have been paid, any emotional distress that may have resulted from the refusal, and any economic harm resulting from the refusal to pay.
Contact an Attorney
Navigating through the legal system after a car accident can be stressful and complicated. Fortunately, you do not have to go through it alone. If you are looking for a dedicated, experienced attorney in Charleston, North Charleston or Walterboro, then contact the David Aylor Law Offices for a free case evaluation.