Have you had a car insurance claim that was denied by your insurance company? Do you feel you followed all the claims processes outlined in your underlying insurance policy and your claim was still denied? Well, you are not alone. There have been thousands of cases in Minnesota since the enactment of new law in 2008, where an insured (the policyholder) followed all claims submitting processes for a “covered claim” only to still have their claim denied by their insurer (the insurance company). Believe it or not, sometimes when an insurer chooses to deny a covered claim, it is by design. Yes, this is against Minnesota insurance laws and has an official name, first-party (where the insurer is required to make payments right to the insured) bad faith claims.
What Are First-Party Bad Faith Claims?
Relying on many older insurance cases such as Haagenson v. National Farmers Union Property and Cas. Co., 277 N.W.2d 648, 652 (Minn. 1979) and Morris v. American Family Mut. Ins. Co., 386 N.W.2d 233, 237 (Minn. 1986), covered insurance claims were for many years being rountinely denied by insurers and being upheld by courts.
Enacted in 2008, Minn. Stat. § 604.18 sets out to address this issue. The statute currently reads that insurers who make settlement offers in bad faith to insureds could be responsible for damages up to $250,000.00 as well as up to $100,000.00 in attorney fees. Minn. Stat. § 604.18 does not entirely replace the common law that has developed over time in the insurance practices field. For instance, the insured is still allowed to obtain their own independent counsel and the insurer is still not required to cover items that are clearly excluded from an underlying insurance policy.
Minn. Stat. § 604.18 serves to add and clarify consequences for insurance companies who engage in bad faith negotiating with their insureds.
What Incentive Do Insurance Companies Have to Negotiate in Bad Faith?
You may wonder the rationale for insurance companies engaging in bad faith practices. The reasoning is that many times they get away with it. Many people that do not hire attorneys are not aware of their statutory options and, as a result, accept settlements that are much lower than the value of their claim. In those situations, the insurance companies ultimately win.
Signs your insurance company may be practicing bad faith claims:
Huge delays in payment of your claims
Claims check comes to you for far less than any agreed upon amount
Denial of your claim
Dragging out investigations and contracting multiple adjusters and experts to delay the process even more
Finding any excuse not to pay your covered claim
Making you a “lowball offer”
If you feel you have been a victim of bad faith insurance practices by your insurer, the attorneys at Martineau Leonard can help.
Feel free to call or email Martineau Leonard for a free consultation and to have any of your questions answered.