If you are a homeowner or business owner who has never had to pursue an insurance claim arising from property damage or a lawsuit, you can be in for a rude awakening. Insurance companies engage a wide array of tactics to avoid paying the full value of claims in a timely manner. While policyholders might wonder why insurance companies refuse to fulfill their contractual obligation to pay valid claims, the answer is simple. Many policyholders simply give up and forfeit their right to benefits provided by the policy. An insurer can make the claims process so onerous and stressful that policyholders decide they cannot prevail. The bad faith process can be used to win a war of attrition through a broad range of tactics. Some of these tactics include:
- Unreasonable Request for Information: While insurance companies have a right to conduct an investigation to determine coverage and the amount of the loss, this process easily can be abused. Insurance companies may request voluminous amounts of documents that are irrelevant or even intrusive. The goal is to bury a policyholder in document production requests, so the time and aggravation involved motivates the policyholder to give up.
- Boilerplate Denials: Sometimes insurance companies will repeatedly deny claims with limited or vague justification for the denial. If the policyholder provides an adequate response to refute the denial, another similar quasi-boilerplate denial will follow. Again, this strategy is designed to demoralize the policyholder, so he or she abandons the claim or agrees to a low-ball settlement.
- Creating Delay: The very process of stalling the settlement of a claim can provide a huge advantage to the insurance company. For the insurance company, delay means that money that would be paid out to a policyholder remains invested and earning a return for the insurance company. On the other hand, the policyholder may become increasingly desperate as the claims process drags on. If you are a homeowner living in a hotel or a business owner whose business is closed, you might feel financial pressure to accept less than the value of your claim, so you can return to your home or return your business to normal operation.
While these examples of bad faith tactics involve the pre-litigation stage of a claim, insurers sometimes turn the litigation process into a war of attrition after a lawsuit has been filed. Although the Georgia case of Coen v. Aptean is not an insurance case, it provides a good example of a judge acknowledging a party engaged in bad faith tactics to frustrate an opposing party.
The judge pointed out, “In sum, defendants gambled on a bad-faith strategy and lost. Defendant vigorously litigated baseless defenses in hopes of litigating plaintiff, an individual with very limited resources, to the point where he could no longer afford to continue without settling for a lesser sum.”
In awarding the plaintiff $175,000 in attorney fees for the bad faith tactics, the judge noted that the defendant’s attorney virtually announced its “war of attrition” strategy when it wrote the following in a letter to opposing counsel: “Prior to your client incurring the expense and risk of motions for summary judgment and trial in this case, we write to inform you that CDC Software’s insurance carrier has recently agreed to cover the costs of defending Mr. Coen’s suit against the company. This development removes the only material litigation risk for the company in pursuing its defense of this case through trial and, if necessary, appeal, which the company fully intends to do.”
As an experienced Miami insurance claims attorney, I understand how to successfully counter this bad faith strategy by insurance companies. If you have questions about Miami-Dade insurance claims, you are welcome to contact my Florida insurance claims dispute law firm. My law firm represents policyholders in claims disputes in Miami and throughout Florida. The Law Firm of J.P. Gonzalez-Sirgo, P.A. offers free consultations and case evaluations. No Recovery, No Lawyer Fees. Call 305-461-1095 or Toll Free 1-866-71-CLAIM.