If you’ve ever filed an insurance claim, you trust that the company handling it will be honest, timely, and fair. However, this isn’t always what happens in the real world. Sometimes, insurers refuse to pay legitimate claims or delay them without reason.
Under Tennessee law, this wrongful behavior is called “bad faith,” and you have a legal right to take action if it occurs. Understanding what constitutes bad faith, how to prove it, and the possible remedies can help you protect yourself from unfair treatment.
What Is a Bad Faith Claim?
Every insurance policy includes a promise that the insurer will deal with policyholders in “good faith.” Essentially, they must investigate and settle claims honestly and promptly. When they fail to meet that standard—intentionally or recklessly—they can be liable for bad faith. Common red flags include refusing to pay a valid claim, making extremely low settlement offers, or misrepresenting policy terms to avoid coverage.
Tennessee recognizes that such tactics harm not just the policyholder but also the broader public, leading the state to allow insured individuals and third-party claimants to pursue compensation beyond the policy’s face value.
The Insurer’s Legal Duties
In Tennessee, insurers have specific duties when handling claims. They must respond to you in a timely manner, thoroughly investigate the facts, and treat the claim fairly based on the evidence, including paying on time. Failing to communicate, stalling for no valid reason, or outright denying a legitimate claim can qualify as bad faith if the company acted unreasonably.
Because insurance companies have substantial resources, they sometimes rely on delay tactics or complex policy language to discourage claimants from seeking the compensation they deserve.
Key Examples of Bad Faith
Some people suspect bad faith but aren’t certain if it applies to their situation. While there’s no one-size-fits-all list of behaviors, a few common scenarios occur:
- An insurer flat-out refuses to pay a claim without giving a solid reason, even though your policy covers it.
- The company offers a settlement that’s significantly less than what your damages suggest you need.
- The insurer fails to investigate your claim properly, ignoring critical evidence or witness statements.
- Adjusters repeatedly delay communications or dodge requests for status updates, causing unnecessary stress and financial strain.
Proving bad faith means showing that the company wrongly denied or underpaid you and that they knew (or should have known) their actions were improper.
Damages in a Bad Faith Claim
When you file a bad faith lawsuit in Tennessee, you can seek more than the initial amount of the claim that was improperly denied or delayed. You may also pursue additional money to cover the emotional toll and financial harm caused by the company’s misconduct, such as costs you incurred due to not having funds when you needed them.
In severe cases, courts might award punitive damages if the insurer acted especially maliciously or recklessly. These extra damages aim to discourage insurance companies from engaging in deceptive or unfair practices.
Proving Bad Faith Under Tennessee Law
Winning a bad faith lawsuit means presenting clear evidence that:
- The policy covered your claim or otherwise obligated the insurer to pay.
- The insurer willfully or recklessly refused to honor your claim, pay in a reasonable amount of time, or engaged in another similar kind of action.
- You suffered losses or distress because of this refusal or delay.
It’s important to document every step in the process, including phone calls, emails, letters, or any attempt you made to provide necessary information. If the insurer ignored or misrepresented facts, keep a record of that as well. This evidence can be critical in court or during settlement negotiations.
Why Hire a Lawyer for a Bad Faith Claim?
Pursuing a bad faith claim can be complex, especially when you’re up against a large insurer with its own legal team. An experienced personal injury lawyer can:
- Evaluate your insurance policy to pinpoint coverage details and the company’s obligations.
- Gather and organize paperwork, such as correspondence and medical records, that prove your losses.
- Negotiate a fair settlement or, if needed, fight for you in court.
- Handle all communications so you can avoid additional stress.
Without professional representation, getting caught in legal technicalities or falling for lowball settlement offers is easy. Hiring a qualified attorney can significantly increase your chances of a successful outcome.
Contact a Nashville Personal Injury Attorney for a Free Consultation
Dealing with an uncooperative or dishonest insurance company can be discouraging, especially if you’re dealing with serious injuries. Fortunately, you don’t have to handle it alone. A knowledgeable Nashville personal injury lawyer at Labrum Law Firm Personal Injury Lawyers can look at your situation, explain the relevant laws, and help you file a claim for compensation.
Contact us today at (615) 338-9500 for a free consultation so that you can get started with your case and learn about your legal options.
