Insurance Companies Must Act in Good Faith or Pay Additional Damages

Insurance

Assisting Drivers in Massachusetts and Rhode Island Work with Insurance Claims

Massachusetts and Rhode Island, like the vast majority of other states, require every owner of a motor vehicle to secure a minimum level of liability insurance, in order to ensure that a fund of money will be available to pay damages caused by the negligence of a driver of that vehicle. The insurance policy is a special type of contract in which both the company and the policyholder have obligations. For example, the policyholder must pay the agreed premium.

Insurance policies are more than mere contracts, however. Because of the nature of insurance and because individuals usually lack financial leverage when dealing with such large, well-funded financial institutions, insurance companies have additional responsibilities. One of the most important is the requirement that the company deal with policyholders, and others, in good faith. If an insurance company fails to deal in good faith, it can be held liable for additional damages, over and above the amounts that it owes because of the negligence of its insured.

Bad Faith: What is it?

Generally speaking, an insurance company acts in bad faith when it: (i) fails to fulfill the obligations of the insurance policy, or (ii) fails to act according to the laws of the particular state within which the insurance policy is written. The following are some – not all – bad faith actions that can subject the insurance company to additional liability:

  •  Failure to investigate a claim in an appropriate manner
  •  Refusal to pay a claim that it reasonably owes
  •  Unreasonable delay in paying a claim that it owes
  •  Requiring an unreasonable amount of paperwork in order to process the claim
  •  Failing to explain sufficiently the reasons for denial of a claim
  •  Failing to defend a claim brought against one of the insureds
  •  Failing to settle claims filed against an insured when reasonable persons would conclude that liability is likely

Massachusetts and Rhode Island Grant Consumers Broad Protections

Mass. Gen. Laws ch. 93A grants consumers in the Bay State broad protections, but consumers should bear in mind that, prior to filing a bad faith lawsuit against the insurance company, they must:

  •  Make a written demand for relief, setting forth the unfair and deceptive acts with reasonable specificity;
  •  Describe the damages that the consumer sustained, and make an appropriate demand for compensation; and
  •  Notify the company that it may be liable for multiple damages, attorneys’ fees, interest, and costs, if it fails to respond appropriately within 30 days. If the company does not respond with an appropriate offer within 30 days, the consumer may file suit.

Rhode Island’s bad faith statute is R.I. Gen. Laws § 9-1-33 is fairly similar to that in Massachusetts. Moreover, in Rhode Island, if an insurance company declines to settle a case within its policy limits, it does so at its peril. If the case goes to trial and results in a verdict that exceeds the policy limits, the company can be liable for the entire amount, even the amount that exceeds the policy limits.

Struggling With an Insurance Company?

Are you struggling with an insurance company over a claim? Does the insurance representative seem to drag his or her feet at every step in the process? If so, you deserve skillful, energetic, and experienced attorneys to help you with your case. You may have a claim for bad faith against the insurance company. The injury lawyers at Bottaro Law Firm have the resources to investigate the situation. They have the knowledge and stamina to fight for your legal rights. If we take your case, we will pursue it at no cost until we win. Remember that delay can harm your case. Our experienced legal team is available 24/7 for a free consultation. Give us a call at 866-529-9700, or complete the convenient online contact form.