Insurance Litigation From Start To Finish

Tuesday, July 19th, 2016

The purpose of insurance is to protect insureds against various types of risk, whether known or unknown. By spreading risk across a large group and pooling premiums, insurance companies are positioned to protect individuals from extensive losses that have the potential of being very expensive to manage.

Typically, when a loss occurs, the insured files a claim with his/her insurance company, who then initiates an investigation of the claim. In the meantime, the insured is left waiting until the investigation is completed and a payment is tendered. Sometimes, however, the payment is delayed or never arrives.

Claim denials are not as rare as one would think: policies are often complex and contain numerous exclusions of which insureds are often unaware. Like all other businesses, insurance companies attempt to reduce costs to increase the bottom line. Accordingly, not all claim delays and denials are justified, resulting in litigation.

What is insurance litigation?

Insurance litigation includes disputes regarding the insurer’s responsibilities under the terms of the policy. If an insurance company denies a valid claim, offers an amount that is well below their obligation, or purposely delays investigating or paying a claim, that insurer could be acting in bad faith.

What is bad faith? A policy is essentially a contract between the insurance company and the insured. Both have duties and obligations under this contract. Insurers are expected and legally required to protect the best interests of insureds, especially during times of loss. Therefore, if an insurer purposely fails to protect the interest of the insured, it can be acting in “bad faith.”

When do you have to get involved with insurance litigation?

If you have submitted a claim and have not been adequately compensated based on the terms of the relevant policy, your self-help remedies are limited. At times, it can be difficult to negotiate with an insurance company simply by virtue of the gross inequality in bargaining power among the parties. Insurance companies have the resources, through access to attorneys and extensive capital reserves, to fight lawsuits brought by individual insureds.

As a result, many insureds seek the assistance of skilled attorneys who have experience with insurance companies. Because attorneys are aware of the severe penalties that insurance companies may incur for failure to investigate, pay, or fairly adjust a claim, involving an attorney can reduce, or even eliminate, the bargaining power discrepancy between the insurer and insured. Even if an insurance company makes an offer to settle a claim, an attorney can help determine whether the offer is fair or justified under the terms of the policy.

If you are in need of an experienced insurance litigation attorney, please contact the team at Brown & Fortunato in Amarillo, Texas. Give us a call at (806) 345-6300 or Contact Us via email to learn more about our practice areas. We welcome you to visit our office at 905 S. Fillmore St., Suite 400, in Amarillo, Texas.

This information is subject to change. Please check for updates that are more recent than the published date of this article.