In the last 10 years, class action lawsuits against insurance companies have grown.  The very nature of the insurance industry lends itself to similar factual scenarios that invite class actions.  This is true regardless of the type of insurance at issue – health, life, auto, fire, home, malpractice, etc.

Bad Faith Actions

An insurance policy is a contract between the insurance company (the insurer) and the person buying the insurance (the insured).  Both parties are required to follow the terms of the contract and to act in good faith.  For the insurance company, this means that it must look fairly at any claims filed by the insured and cannot look for unfair or unreasonable methods to escape its obligation to pay.  In fact, insurance companies are expected under their fiduciary duty to look for ways to pay benefits to insureds.

Although state law varies widely on the elements of proof required for a bad faith claim, the insured must usually establish that:

• The insurance company had no reasonable basis for denying the insured’s claim.
• The insurance company either knew or should have known that there was no basis for denial of the claim or that the insurance company acted with reckless disregard for the facts or the insured's rights.

There are many ways in which an insurance company can act in bad faith to deny legitimate claims.  Insurers can:

• Insist on exhaustive and unreasonable documentation.
• Claim to have lost or never received information.
• State that information was not received in a timely manner.
• Maintain that a valid claim is not covered.
• Fail to investigate or process a claim.

If a legitimate claim is filed, but then denied, the insurance company has acted in bad faith and has breached the contract.  This gives the insured the legal right to seek compensation for his or her damages through bad faith insurance litigation.  An insured is entitled to file a lawsuit for the damages that should have been paid on the claim.  The insured may also be able to collect additional expenses such as court costs and attorney’s fees.  Punitive damages may be awarded to punish the insurance company for any intentional or malicious wrongdoing and deter future similar offenses.

Insurance Fraud

Additionally, litigation may be brought against insurance companies on the basis of fraud.  Insurance fraud can be perpetrated in many forms such as selling policies with inadequate coverage, with duplicative coverage, with coverage for claims that could never be accepted or for which the insured could never qualify, or inappropriate coverage.   Some insurance companies have even been known to use dishonest business practice to bilk people out of their entire savings by insurance investment schemes – to which the elderly are particularly vulnerable. Sometimes people are defrauded by con artists who sell fake health insurance policies to unwitting consumers. There are times when insurance companies illegally inflate premiums or habitually over-bill policyholders or even take advantage of their own insurance agents.

Life Insurance and  Annuities

Universal life insurance, whole life insurance, and equity-indexed annuities are complicated and confusing. Consumers purchasing life insurance or annuity products rely on the sales agent or advisor to accurately explain how the products work.  Unfortunately, some sellers of annuity and life insurance products take advantage of unknowledgeable  consumers and sell them inappropriate products that do not fit the consumer’s needs.  This often happens because agents are paid commissions and fees based on the type of product sold and are not rewarded for finding a product that fits the consumer’s need.  Sometimes, the agents have been misled by the annuity company or insurance company or just have had little or no training with regard to sale of the product. Nonetheless, at the time of sale of a life insurance policy or annuity, buyers are often misled about the terms of the products and actual costs.  Below are some typical situations giving rise to legal claims:

• A senior citizen is sold an equity-indexed annuity or other product that does not allow the senior citizen to access their money without severe penalties. 
• A buyer is misled about fees and charges that drain value from an annuity or cash value-building life insurance product.
• A buyer is told the necessary premiums for life insurance would be paid in full before retirement and then receives bills for more premiums after retirement.
• A buyer purchases a life insurance product with the promise the premiums will never increase and then years later is told higher premiums are necessary to keep the policy in force.
• A buyer is told the universal life or whole life insurance policy will be "cash value building" and then, when attempting to borrow against it for college expenses, retirement, or to buy a home, is told there is little to no value available.
• An insurance policy is sold as an "investment" or "retirement plan."
• The family of the deceased attempts to collect life insurance benefits only to find that the policy has lapsed because the salesman was pocketing premiums collected in cash rather than turning the premiums into the insurance company.

If you would like to discuss a life insurance policy or annuity you purchased, you may contact Belt Law Firm, P.C. and arrange a free consultation with a lawyer who can handle insurance and annuity cases. We will arrange for you to meet with a lawyer with the experience to evaluate your claim regarding life insurance or annuity sales practices. In most cases, if we take a case, you pay no expenses or attorney fees unless we recover a settlement or verdict on your behalf.

For your free consultation with an Insurance Litigation Lawyer fill out our contact form or call us at 888-933-1514 (toll free).