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Bad Faith Lawsuits in Illinois
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Generally speaking, bad faith lawsuits are when someone sues an insurance company for treating them unfairly. By law, insurance companies owe their policyholders "good faith and fair dealing," which basically means that they can’t look for ways to deny a valid claim.
This duty of good faith and fairness includes things such as promptly investigating claims, paying claims within a reasonable amount of time, detailing the reasons a claim is denied, making efforts to settle, and paying judgments entered against their policyholders.
For example, when a driver is at fault in a vehicle accident and is sued and loses, their insurance company is required to pay the amount of the judgment against them. If the insurance company delays unreasonably, or refuses to pay altogether, they may be acting in bad faith. In this situation, the at-fault driver could sue their own insurance company.
Sometimes an insurance company doesn’t pay and it isn’t bad faith such as when they may have a valid defense to a claim. On the other hand, if you are sitting at a red light and get rear-ended to the point that you need neck surgery, if the insurance company doesn’t within a reasonable time pay out a $50,000.00 policy by their driver, then they are acting in bad faith.
Another example is if your home is damaged in a fire. Your homeowner’s insurance company is expected to investigate and process your claim, and they cannot deny your claim without good reason, or delay your claim in hopes of getting you to settle for much less than the claim is actually worth. This is another example where a bad faith lawsuit might be appropriate.
If you have a successful bad faith lawsuit in Illinois, then policy limits go out the window. For example, in the situation above where someone got rear-ended, if the insurance company was found to have acted in “bad faith” then even though they only were responsible for $50,000.00 in losses, they could have to pay out the actual loss. So if that person had $250,000.00 in medical bills, plus a year of lost work, plus pain and suffering, the actual payout could be well into the six figures or higher.
To show bad faith, at a minimum you must prove that you have presented to the insurance company evidence as to what your loss is and made a demand from them for the policy limits. Please note that you don’t get extra money just because they acted badly, you just get the opportunity for a full recovery that you may not have had otherwise.
Insurance companies are in an interesting position – one that doesn’t always put you first. Your insurance company will tell you that they are there to look out for you, but in reality they answer to the company’s stockholders. Basically, this means that making money is their first priority, and the way an insurance company makes money is by selling as many policies as possible and paying out as little in claims as possible. Obviously, this is a conflict of interest.
So the law gives you, the insurance consumer, some protection. If you can prove that your insurance company has harmed you by acting in bad faith, you can collect damages in a lawsuit.
If you think you may have a bad faith claim against an insurance company, it’s important to talk to an attorney with experience in taking on insurance companies. In this type of case, an attorney generally charges a contingency fee, which means that you only pay if you win. If you lose your bad faith lawsuit, you pay nothing. An initial consultation is usually free.
Dealing with insurance companies can be confusing and frustrating. You may even suspect you’re being taken advantage of. We know bad faith lawsuit attorneys in Illinois who have years of experience and a track record of success. If you need to talk to an attorney about a possible bad faith insurance claim, please contact us. We’ll answer your questions honestly, and help you find an Illinois attorney that will be an advocate for you.