Bad Faith, Vexatious Refusal and the Role of an Insurance Claims Lawyer

Bad faith insurance claims are one example of how insurance companies can be deceptive and unfair. Insurance is designed to protect people. Policyholders pay into the system expecting to have coverage for some of life’s most devastating challenges: such as car accidents, burglary, flooding, house fires or serious health diagnoses. Unfortunately, in many cases, insurers delay claims processing or wrongfully deny claims to minimize losses and protect its bottom line. 

When an insurance company behaves badly, what are the legal remedies? 

Fear of retaliation or claim denial keeps many people from reaching out for help when they are stuck in a months or years-long insurance battle. A bad faith insurance claims lawyer, or a lawyer with experience in vexatious refusal to pay an insurance claim can help. Read more about the possible legal remedies that can hold insurers accountable.

Two Common Scenarios a Missouri Insurance Claims Law Firm Can Help With

When a policyholder seeks legal expertise for their insurance company’s wrongdoings, their case will typically correspond to a Bad Faith Insurance Claim or Vexatious Refusal to Pay. Both categories are related to improper handling of an insurance claim, but target different aspects of insurer misconduct. 

“What is a Bad Faith Insurance Claim?”

A Bad Faith Claim against an insurer applies to liability claims against an insured. There are two types of bad faith: bad faith refusal to settle and bad faith refusal to defend. In either case, the insurer failed to uphold its contractual obligations to a policyholder in a liability claim — to defend and indemnify the insured. The concept of “bad faith” refers to the insurance company putting its own interests ahead of its insured. The most common scenario is when an insurer is given an opportunity to settle a claim within the policy limits and the insurer fails to settle the claim. When this happens, the insurer is exposing the insured to personal liability above the policy limits. This is a classic example of bad faith refusal to settle. Another example of bad faith is the insurer’s bad faith refusal to defend an insured in a lawsuit. In each of these cases, the insurer is failing to protect the interests of the insured and is putting its own interests (financial profits) above the insured.  

If an insurance company’s actions in a liability claim filed against the insured are motivated by a desire to save money or avoid financial responsibility, without protecting the rights of the insured, the policyholder may consider reaching out to a bad faith insurance claims attorney.

“What is a Vexatious Refusal to Pay?”

Another common type of lawsuit against an insurance company is a Vexatious Refusal lawsuit. Vexatious Refusal claims occur when the insured makes a claim against its own insurance company and the insurer intentionally obstructs or frustrates the claims process to the burden of the policyholder. The term “vexatious” refers to the insurer creating unnecessary difficulties or delays, or low-balling offers at a time when a claimant is desperate to have its claim resolved. 

Possible examples of vexatious refusal include:    

• Repeatedly requesting excessive claim documentation with no legitimate reason;
• Deliberately delaying claim payments; or,
• Denying a claim based on suspicion, or without proper investigation of the facts.  
  

The goal of a vexatious refusal lawsuit is to seek justice for an insurer’s wrongful actions and predatory behavior. It is a penalty against the injured person’s insurance company. A vexatious refusal lawyer works to hold insurers accountable and ensure they fulfill its obligations.

How an Insurance Claims Lawyer in Missouri & Illinois Can Help

The worst insurance companies are the ones who take advantage of policyholders who have already suffered a devastating loss. Financial hardship resulting from the improper handling of an insurance claim is another common barrier to asking for help. An experienced bad faith insurance claim attorney, or a vexatious claim attorney, can help pursue cases of insurer misconduct.

A Missouri insurance claims lawyer can help policyholders navigate the challenges of fighting back against an insurer, whether they are the plaintiff bringing the case forward, or the defendant who is being sued. Hiring a bad faith insurance claim lawyer or vexatious refusal attorney provides the claimant with the tools to hold insurance companies accountable and to put the insured’s interests ahead of its own.

Many lawyers who fight insurance companies work on a contingent fee basis, which means their clients do not pay any legal expenses or attorney fees unless a settlement or judgment is won for their case. This is a particularly important benefit for individuals who are involved in a lengthy insurance battle, who may already have financial challenges resulting from a delayed or denied claim that would make it impossible to pay for legal expenses upfront.      

Types of Financial Compensation for Claims Against Insurance Companies

In pursuing an insurance company bad faith claim, or a claim of vexatious refusal, there are different categories of damages and financial compensation the policyholder may be entitled to. The amount of money that can be recovered is not always equal to just the amount of the policyholder’s insurance claim. For example, if it is found that the insurer did not adequately assess a claim, the insurance claims attorney can push for penalties.

The possible damages that can be recovered in an insurance claims lawsuit are:

• Actual Damages resulting from the initial loss, accident, incident or injury;
• Consequential Damages arising from the insurer’s delayed or denied payment(s) to the policyholder;
• Punitive Damages or penalties applied in situations of gross negligence or misconduct; and,
• Attorney Fees in Vexatious Refusal claims.

The monetary damages that can be recovered in an insurance claims lawsuit depend on the unique details of each case, and the first step is to reach out for a consultation or case evaluation. Time is an important consideration: there are statutes of limitations that may limit the time to file a claim. Therefore, if you believe you have a claim for Bad Faith or Vexatious Refusal, you should contact an attorney at once.      

Padberg Appelbaum Knepper Holds Insurers Accountable

The St. Louis law office of Padberg Appelbaum Knepper (PAK) has successfully pursued complex insurance litigation for both plaintiffs and defendants. Notable cases include victories for an insurer’s bad faith refusal to settle an auto claim where multiple parties were involved in a car accident, and successfully proving an insurer’s bad faith refusal to defend and indemnify a company in a claim filed against it by a severely injured worker on a construction site. PAK has also successfully handled many claims against an insurer for vexatiously refusing to pay injured claimants in their uninsured or underinsured motorist coverage claims. PAK has recovered millions of dollars in damages for our clients because we work tirelessly to help them achieve justice for their suffering.   

If you or someone you know is the victim of insurance company bad faith or vexatious refusal actions, contact us today for a free and confidential consultation.