What Is A Bad Faith Insurance Claim?

A bad faith claim by an insured alleges that their insurance company acted in some way that violated their duties to you, including delaying or failing to investigate a claim, or intentionally delaying or failing to settle a claim.  A bad faith claim seeks damages from the insurance company for these improper claim handling practices. 

In Illinois, there are two types of potential insurance claimants: the first-party claimant and the third-party claimant. 

First-Party Bad Faith Insurance Claims

A first-party claimant is a person making a claim who is the policyholder that purchased and pays premiums for insurance coverage.  A common example is a homeowner who makes a claim under his own homeowner’s insurance policy for wind damage to his house caused during a storm. Another example if a person has a motor vehicle collision but the driver at fault has very little or no auto insurance, then the injured party can file an uninsured motorist (UM) or underinsured motorist (UIM) claim with their own insurance company.  If the carrier does not handle the claim properly, then the insured may have a bad faith claim.

When you purchase an insurance policy, you have the right to expect that your valid claim will be paid. Unfortunately, that is not always the case and you need the support of the Giacoletto Law Firm with its experience in Illinois bad faith claims.

In Illinois, first-party bad faith claims are governed by a statutes and regulations, but typically are pursued by individuals filing a lawsuit against their own insurance company for either breach of contract or declaratory judgment.  A breach of contract claim alleges that the insurer failed to pay the claim under the policy amounts to a breach of the agreement. A declaratory judgment claim asks a judge to rule, or “declare,” that coverage did or did not apply to a certain claim. 

Under either of these types of lawsuits, the compensation available to the insured/policyholder is restricted to the policy limits.  A successful policyholder will recover the value of his claim, but no more. 

However, if the policyholder can prove that the insurance company’s refusal to pay the claim was “vexatious and unreasonable,” the insured may be entitled to additional damages and their attorney’s fees under Illinois’s bad faith statute. 

The statute serves as an additional penalty to deter insurers from treating policyholders unfairly. It also allows for the recovery of reasonable attorneys’ fees and costs.  However, the “penalty” amount is limited to a maximum of $60,000, no matter how outrageous the insurer’s conduct.

Proven Representation

You should seek assistance from an attorney with experience in bad faith insurance claims. The Giacoletto Law Firm has aided many clients who have had their insurance company fail to meet their legal obligations. We can conduct a full investigation into the insurance company, revealing its failings in the handling of your claim. With this evidence combined with our personal injury experience, we can help you hold your insurance company responsible, seeking damages to compensate you for your financial losses.

For more direct answers to your questions, call the Giacoletto Law Firm at 618-346-8841or toll free at 888-346-8841 to speak today with an experienced Madison or St. Clair County bad faith insurance lawyer centrally located in Collinsville.

Steve Giacoletto
Collinsville Personal Injury Attorney