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Hudson, Potts & Bernstein is an industry leader in matters of insurance law and coverage. For more than a century, HPB has represented and advised insurers, excess and specialty lines, and self-insurance funds on matters of state and federal law, as well as defending insurers in coverage dispute litigation.
Typically, a bad faith claim is filed when an insured challenges the carrier for failing or refusing to pay a claim for a policyholder. They may assert that the claim is legitimate but the carrier disagrees. This can lead to a bad faith claim against the carrier.
Other instances of bad faith claims are when a carrier does not disclose policy exclusions and limitations to the insured prior to purchase of the policy. There are other ways that an insurance company can be accused of acting in bad faith and this is why it is so important to have an experienced, knowledgeable attorney on your side.
A common argument in insurance law is what a policy covers. Policyholders will file lawsuits against carriers, alleging coverage issues which are essentially bad faith claims. These arguments usually do not arise until there has been an accident, injury, or other issue and the policyholder turns to their policy, only to discover the issue they are having is not covered.
In cases where the line is very fine between what is covered and what is not, it is integral for legal representation to handle the litigation. This can raise exposure, create bad PR, and damage a company’s reputation as well as public perception. More than that, these claims can come with a steep financial risk.
Being self insured can come with its own set of risks. To be self insured typically means that a person or business has put aside funds to pay for any bills or accidents that may occur. While it seems preferable to pay monthly or quarterly premiums, there is a great deal of risk involved.
A serious accident, unexpected bill, or expensive lawsuit can deplete funds, leaving no cushion and no insurance. It also means that the person or business that is self insuring is essentially on their own, Where an insurance policy provides some degree of coverage and protection, self insuring does not.
There can be many legal issues surrounding this type of insurance and having solid legal representation for litigation as well as education is a must.
The claim file is the core of coverage issues and bad faith claims. All information that is contained in that file can potentially be vital evidence in a lawsuit. A legal team will audit the claims files and review all aspects to identify any potential for liability exposure, vulnerabilities, and other possible problems that can arise. By being prepared the risks are minimized and claims practices are improved.