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Bad Faith and Insurance

We at Mike Agruss Law are often asked whether insurers commit “bad faith” by either failing, or refusing, to settle particular cases. Accident victims must be aware that the insurer of the “at-fault” party does not actually owe them a duty of care; it is instead owed to the insured, who are protected from excess judgment by his/her own insurers’ “good faith” efforts. Failure on behalf of the insured can potentially create liability for an excess verdict if it is assigned to the victim of the accident.

This sort of “bad faith” may occur when the victim offers to settle a case within the policy limits of the insured in exchange for the release of all claims. If an insurer refuses to settle for this or fails outright, there may be extra-contractual damages. It is not uncommon for insurers not to pay to protect the insured and provide pre-contextual reasons for refusing, and victims of accidents assert that this creates liability on behalf of the insurer. They argue that the insurer’s failure is all that matters, but insurers believe there must also be something beyond failure, meaning “bad faith” or some other demonstration of ill will.

A claim by an insured individual of “bad faith” on behalf of an insurer based on an [alleged] wrongful refusal to settle a case will require, first and foremost, proof that the third party proposed an offer to settle claims against the insured for a sum within policy limits. The offer generally satisfies this element if its terms create an enforceable contract, all third parties join the demand, and it provides an official release of all insured individuals. This type of claim also requires proof that the insurer failed (unreasonably) to settle a reasonable offer within a time-frame specified by a third party.

Questions of fact often arise, as well. For example, when an insurer contends that more time is needed on the day a policy limit is set to expire, it is often a question of fact whether more time was truly needed or another insurer could have accepted the offer under the same circumstances; the extent of the victim’s injuries compared to the particular liability limits is also an important factor in such a determination. If you’ve suffered a significant injury, you will need an experienced lawyer who is willing to pursue “bad faith” cases when insurers fail or refuse to pay in a timely manner.

If you’ve been injured in an accident, contact Mike Agruss Law for a free consultation. We are a Chicago personal injury law firm representing individuals (and their families) who have suffered an injury in an accident. We will handle your case quickly and advise you every step of the way, and we will not hesitate to go to trial for you.

Lastly, Mike Agruss Law is not paid attorney’s fees unless we win your case. Our no-fee promise is that simple. You have nothing to risk when you hire us – only the opportunity to seek justice.

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