You trust that your insurance coverage will be there when you need it and you faithfully pay your premiums. Insurance companies in Alabama have a legal duty to act in good faith when investigating and assessing claims. Unfortunately, insurance bad faith is not a rare occurrence.
When an insurance company acts in bad faith to deny, underpay, or delay your valid claim, Alabama law gives you the right to file a lawsuit against your insurer. If successful, you can recover the money you are due as well as compensation for the mental anguish you have suffered and your attorney and court costs.
Lattof & Lattof, P.C. represents clients against acts of bad faith by large insurance companies. We are here to serve as your advocate and fight for the compensation you are entitled to receive. Contact us today to schedule your free consultation with an experienced Mobile bad faith insurance lawyer.
How Lattof & Lattof, P.C. Can Help with Your Bad Faith Claims
Insurance bad faith claims are notoriously complicated to prove. Insurance companies in Alabama are armed with teams of lawyers who fight to protect the insurer’s best interests, minimize claims, and sometimes even hide bad faith actions.
Whether you have been injured in a car accident or suffered serious property damage to your home, you can’t afford to fight an insurance company for the compensation you need today. The insurance policy is supposed to be there when you need it, but what can you do when the insurance company unfairly investigates or denies your claim without a valid reason?
Lattof & Lattof, P.C. is a family-owned law firm that has represented Alabama consumers in claims against major corporations for more than 65 years. We have a combined century of legal experience and put it to work to fight for the compensation you deserve.
Our law firm is built on trust and strong communication with our clients. A Mobile personal injury attorney at Lattof & Lattof, P.C. will clearly explain what you can expect going forward and offer guidance through every step of your case. We don’t let insurance companies get away with bad faith; we will fight for your rights!
Alabama Insurance Companies Have a Duty to Act in Good Faith
Insurance companies are for-profit companies that maximize profits by paying out as little as legally possible on claims. While insurance companies have a right to make a profit, Alabama insurance law requires that they act in good faith.
In some states, insurance companies are only required to act in good faith when dealing with their own policyholder. These are first-party claims. Alabama has more comprehensive protection by requiring insurers to act in good faith with first-party and third-party claims.
Under Alabama law, an insurance company has a duty to act in good faith if you:
- Submit a third-party claim when you are injured by the insured policyholder
- Submit a first-party claim against your own insurance policy
What does good faith mean? It covers many types of behaviors the insurance company should follow when evaluating a claim. To act in an good faith, an insurance company should:
- Sufficiently investigate the facts of the case
- Consider the weaknesses and strengths of the evidence
- Evaluate the claim honestly
- Interpret the policy honestly
- Consider the interests of the insured
- Settle within the policy limits, when possible
- Consider the chance that the injured party will sue and win a lawsuit then evaluate the possible range of a verdict
When an insurance claims adjuster fails to take these steps, they may be held accountable.
What Is Considered Bad Faith in Alabama?
Alabama law recognizes a tort of insurance bad faith which allows policyholders or injured parties to bring a bad faith claim against an insurance company that wrongfully denies or delays a claim. Alabama is one of many states to recognize bad faith under tort law, not contract law.
There are two broad types of bad faith recognized in Alabama:
- Normal bad faith claims
- Abnormal bad faith claims. These cases have a fifth element to prove: the insurance company intentionally failed to determine if there was a reasonable or legitimate reason to fail to pay a claim.
You can think of abnormal bad faith as an insurer remaining deliberately ignorant. The insurer cannot simply refuse to investigate and avoid liability for bad faith. The Supreme Court of Alabama issued an opinion on a case in 2013 that it will now refrain from using the terms “normal” and “abnormal” in bad faith cases and move instead toward “bad faith refusal to pay” and “bad faith refusal to investigate.”
To limit payouts, insurance companies may use a range of bad faith tactics. Some of these tactics are fairly transparent, but others can be difficult to recognize. The goal of these attempts is generally to get the injured party or policyholder to accept a denied claim or lowball offer so the claim can be closed.
Common examples of bad faith insurance tactics include:
- Refusing to negotiate a fair settlement offer when liability is clear
- Denying coverage without investigating the claim
- Delaying payments for valid claims
- Misinterpreting the policy language to benefit the insurance provider. Note that in Alabama, ambiguous or vague terms in an insurance policy should be interpreted in the policyholder’s favor.
- Transferring a claim several times as a delay
- Offering significantly less than the claim is worth
- Refusing to provide a written explanation of why a claim was denied
- Failing to respond to requests for documentation
If you believe your insurance carrier is acting in bad faith by delaying, denying, or underpaying your claim, Lattof & Lattof, P.C. is here to help. An experienced Mobile bad faith insurance lawyer will fight for your right to compensation.
Proving a Bad Faith Claim in Mobile, AL
Proving insurance bad faith in Alabama can feel like an uphill battle. It’s not enough to show nonpayment; you must also show there were no reasonable grounds for denying a claim.
You must prove several elements of your case to successfully win a bad faith claim against an insurance company:
- There was an insurance contract between the parties that was breached
- The insurer intentionally refused to pay the claim
- There was no legitimate or arguable reason to refuse to pay
- The insurer had actual knowledge there was no reasonable basis to deny the claim
There is a conditional fifth element to prove as well. If the insurer intentionally failed to determine if there was a lawful reason to deny a claim, you must prove this intentional failure.
One of the most crucial elements to prove to win a bad faith claim is that there is no legitimate reason to deny a claim. If the insurance company can show a question of fact or a legitimate basis for denying a claim, a bad faith claim will fail.
This issue makes it particularly difficult to prove insurance bad faith. Alabama courts have upheld that a bad faith refusal to investigate a claim can’t survive if the insurer had a legitimate or arguable reason to refuse to pay the claim when it was denied. This means insurance companies may delay the process long enough to appear they are doing their duties to investigate and forming some type of legitimate difference of opinion.
To combat this, an experienced bad faith insurance attorney in Mobile will investigate the claim and seek to uncover evidence that shows a denial was unsupported or the claim was not properly investigated.
While most insurance bad faith law in Alabama focuses on denial or refusal cases, there is also case law specifically addressing claim delays.
Under Alabama law, a denied claim can be an actual or constructive denial. An actual denial typically involves some correspondence from the insurance company to the policyholder. However, you can show that your claim was constructively denied if:
- There was a passage of time so great that the delay alone creates a denial or
- There was a significant delay in payment and some wrongful intent.
There is no clear answer on how long of a delay is considered sufficient, but the courts have found that 6 weeks without acknowledging coverage is not enough to be considered constructive denial.
Compensation for a Bad Faith Insurance Claim in Mobile
When an insurance company acts in bad faith, it can leave you not only frustrated but struggling with the financial burden of serious property damage or bills. Proving an Alabama bad faith insurance case can be difficult as insurers are skilled at hiding bad faith tactics. The family-run law firm of Lattof & Lattof, P.C. has more than 65 years of experience representing clients against big companies and insurers.
We will fight for the fair compensation you deserve when your insurance company acts in bad faith. After proving your case, you can be entitled to:
- The value of the claim. This includes the damages due to you under the insurance policy. You may be entitled to demand your full value of damages, even if they exceed the policy limits.
- Legal fees and costs which are called “consequential damages.”
- Punitive damages to punish the insurance company for their bad faith actions and to serve as a deterrent against future acts of bad faith.
This means that winning your case can help you recover not only the money you should have received from the insurer but potentially punitive damages as well. To recover punitive damages in a bad faith claim, you will typically need to show intentional conduct by the insurer with a dishonest purpose.
Contact a Mobile Bad Faith Insurance Lawyer
Has your insurance company delayed, denied, or underpaid your claim in bad faith? Under Alabama law, insurers can be held liable for bad faith actions and owe a duty to policyholders to act in good faith. At Lattof & Lattof, P.C., we represent clients against big insurance companies with more than 65 years of experience.
You don’t need to fight the insurance company on your own. Contact the legal team at Lattof & Lattof, P.C. today to schedule your free consultation with a bad faith insurance lawyer in Mobile, Alabama to review your insurance dispute case.