How Bad Faith Claims Affect Injury Claims

Experiencing an injury is already a stressful and challenging ordeal. Potentially adding to this burden, however, is dealing with an insurance company that acts in bad faith. Bad faith claims occur when insurers fail to meet their contractual obligations with their insureds (first-party claims) and policy beneficiaries (third-party claims). This bad behavior by an insurance company is not only illegal but can turn an already difficult situation into a prolonged nightmare.

My aim today is to examine how bad faith affects injury claims and the remedies available under Kentucky and Indiana law.

The Burden of Bad Faith Practices

Bad faith practices by insurance companies directly impact every aspect of the injured person’s life:

• Increased Financial Strain. You are likely to face mounting medical bills, lost wages, and other financial pressures in the immediate aftermath of an injury. The financial strain only intensifies when your insurance company acts in bad faith by delaying payments, offering inadequate settlements, or outright denying your valid claim. For example, if your insurer repeatedly requests unnecessary documentation or stalls the claim process, you may be left scrambling to cover expenses while your claim is unresolved. This unnecessary additional financial burden makes it even harder to cope with your injury and could delay your recovery.
• Extended Legal Battles. Bad faith practices often lead to complicated legal proceedings. You may have to engage in a lengthy legal battle to address the insurer’s misconduct instead of receiving fair and timely compensation to which you are entitled. You may find yourself entangled in a fight not just for your rightful compensation but for accountability from an insurer that should have been working in your best interest from the start.

Legal Frameworks and Remedies

Fortunately, both Kentucky and Indiana have legal frameworks in place designed to protect policyholders from bad faith practices and offer remedies for those affected.

Kentucky’s KRS § 304.12-230. The law is quite clear In Kentucky about the obligations of insurance companies under KRS § 304.12-230. This statute enforces the duty of good faith and fair dealing, which requires insurers to:

• Promptly Investigate Claims. Insurers must conduct a thorough and timely investigation of your personal injury claim. If they fail to do this, they may be acting in bad faith.
• Make Fair Settlement Offers. The insurer must offer reasonable settlements based on the evidence and the damages you have sustained. If they undervalue your claim or refuse to offer a fair settlement, it may constitute bad faith.

If you believe your insurer has acted in bad faith, you have legal recourse. You can seek compensatory damages for your losses, punitive damages to punish the insurer’s misconduct and recover attorney’s fees and other costs associated with pursuing a bad faith claim.

Indiana’s IC § 27-4-1-4. Indiana addresses unfair and deceptive practices by insurers in IC § 27-4-1-4. The statute requires:

• Fair Settlement Practices. Insurers must handle claims fairly without engaging in deceptive practices such as unreasonable denials or delays. If your insurer fails to adhere to these standards, it may be in bad faith.
• Consumer Protection. The law protects you by ensuring that insurance companies act in accordance with fair practices and fulfill their contractual duties.

You can pursue legal action under this statute if you are a victim of bad faith. Remedies may include compensation for your actual damages, additional damages for the insurer’s bad faith conduct, and reimbursement for legal fees. Punitive damages may also be awarded to deter the insurer from similar behavior in the future.

Real-World Examples

To better understand the impact of bad faith and the legal remedies available, consider these hypothetical scenarios:

• Example 1: Unreasonable Delay. Imagine you’ve been injured in a car accident, and despite having clear evidence of the other driver’s liability, your insurance company continually delays processing your claim. They request more documents, provide vague responses, and don’t offer a fair settlement. This delay worsens your financial strain as you struggle with medical bills and lost income. Under Kentucky’s KRS § 304.12-230, you can file a bad faith claim against the insurer. If the court finds that the insurer acted in bad faith, you could receive compensation for your damages, punitive damages to address the insurer’s misconduct, and reimbursement for your legal expenses.
• Example 2: Undervaluation of Claims. Suppose your workers’ compensation insurer offers you a settlement far below the amount needed to cover your medical expenses and lost wages. You challenge the offer, arguing that it’s an act of bad faith. In Indiana, under IC § 27-4-1-4, you can pursue a bad faith claim against the insurer. If successful, you may receive full compensation for your injuries, additional damages for the insurer’s bad faith conduct, and be reimbursed for legal fees. The court may also impose punitive damages to deter similar actions by the insurer in the future.

Dealing With Bad Faith Claims

Dealing with bad faith in insurance claims adds an unnecessary layer of stress and hardship to an already difficult situation. Our experienced Kentucky and Indiana injury lawyers can protect your rights by employing statutes like KRS § 304.12-230 and IC § 27-4-1-4. Our injury attorneys’ experience with bad faith claims allows us to seek full and fair compensation for you and hold insurers accountable for their actions.

Call us at 502.553.4750 to start your free and confidential case evaluation. Alternatively, one of our experienced personal injury lawyers can call you by completing the form on our contact page.