Stephen Hasner | Car Accidents | December 3, 2020
We buy insurance to help cover losses that could break us if we had to pay them out of pocket. Car insurance, health insurance, property insurance, renter’s insurance, life insurance. All of these types of insurance policies can help. Insurance companies love receiving our monthly payments for coverage. Adjusters hate paying out on claims.
By its nature, the relationship between insurance, insureds, and claimants is full of conflicts of interest. That is why insurance companies are tightly regulated. All aspects of insurance companies are regulated by law. Insurance law and the rules and regulations that cover this area of law are quite complex.
In Georgia, insurance companies are regulated by The Unfair Claims Practices Act as well as by general laws and regulations. Like all states, Georgia has time limitations in which an insurance company must respond to all insurance claims. A company has 15 days to acknowledge receipt of a claim and to provide proof claim forms. It must respond by accepting or denying a claim within 15 days once all forms are received.
If the insurance company needs more time, it must let the claimant know at least 5 days before the expiration of the time limit along with an estimation of how much time is needed. When an insurance company denies a claim, it could be that information is still missing, that the company disagrees regarding liability, or it could be a denial made as a part of bad faith or as an unfair business practice.
Appeals Process Following a Denied Claim
When a claim is denied in Georgia, a person may appeal the denial, file a complaint with the Insurance Commission, or file a lawsuit. An appeal is an internal process. All denial letters issued by an insurance company must state the grounds upon which they are issuing their denial. If the company needs more information, gather it, and submit the appeal.
If a person feels that their claim has been unfairly or illegally denied, they should also file a complaint with the Georgia Insurance Commission. The complaint should include all the information regarding the initial claim and copies of all relevant correspondence between the claimant and the insurance company. This complaint may be helpful if a lawsuit is needed.
If a claimant has gotten this far without the help of an attorney, now would be an excellent time to seek the help of an experienced attorney. Attorneys work with insurance companies all the time. They become quite adept at understanding what an insurance adjuster needs to settle a claim. They also become quite adept at understanding when an insurance company is acting negligently or willfully in denying a claim. If your insurance company is acting in bad faith, you will need expert help to resolve the issue.
Understanding Unfair Business Practices
Under Georgia law, any of the following, as pertains to failure to settle, constitutes an unfair business practice if the action is either flagrant or repeated over time:
- Failure to provide proof of loss forms and instructions for completing them within the allowed timeline
- Failure to adopt and use procedures to promptly investigate and settle claims
- Failure to use food faith efforts to fairly resolve claims quickly when liability is clear
- Making an insured or other to file a lawsuit by offering substantially less than the claim is worth (lowballing)
- Refusing to pay claims without engaging in a reasonable investigation first
- Failure to affirm or deny coverage within a reasonable time when requested by the insured in writing
- Failure to give a reasonable and accurate explanation for the basis of any claim denial in writing when requested by the insured.
While any of these may be grounds for an unfair business practices claim against an insurance company, they may also be used as evidence of bad faith. If the denial is being made as either an unfair business practice or in bad faith, you will need help in resolving the issues.
A Lawsuit May Be Necessary If Your Claim is Denied
When an insurance company denies a claim, often a lawsuit is the next step. If the denied claim was made against your own insurance company, the lawsuit is then filed against your own insurance company. This is usually a lawsuit that claims bad faith and unfair business practices on the part of the insurance company.
If the denied claim is against another person’s insurance policy, such as in an automobile accident, personal injury, or product liability claim, then the lawsuit will be against the person or entity causing the injury. That person or entity turns over the lawsuit to their insurance company for handling.
Bad Faith Cases
Georgia Insurance companies are required to use good faith in their dealings with insureds and claimant. In order to prove bad faith in the denial of a claim, you must prove that they not only should have paid the underlying claim. A denial by itself is not enough to prove bad faith.
Most bad faith cases result from denials on claims that were issued as a time-limited settlement offer in accordance with Georgia law.
In order to prove bad faith, the insured will need to prove:
- The claim was covered by the insurance policy
- A demand for the claim was made at least 60 days prior to filing suit; and
- The carrier’s denial was due to bad faith.
These cases are complex. They should be handled by someone with experience in the area. The worst thing a person can do in the face of a denial is to do nothing. Getting help is the first step.