Like other states, Alabama has court-imposed rules requiring that insurance carriers deal in good faith with those who rely on them.
What this means in practice is that insurance companies are not allowed to use the fact that they have a lot of money, and those who rely on them are often in desperate need of money, as a way of forcing a person to accept a low-ball claim settlement or even give up on a valid claim altogether.
Alabama’s bad faith rules can be somewhat complicated, especially since they were developed by judges. If an injured Cullman County resident has detailed questions about bad faith or how it might apply to a given situation, he or she should speak to an attorney with experience in this area of the law.
A bad faith cause of action is a way to hold insurance companies accountable
Basically, bad faith is what Alabama law would describe as a separate tort claim an eligible person can raise against an insurance company.
On a practical level, this means that the victim can ask the insurance company to reimburse items like emotional distress as well as out-of-pocket expenses. Perhaps more importantly, an insurance company’s policy limits will not apply in a bad faith claim.
Insurance companies can deal in bad faith in a number of ways. To give just a couple of examples, an insurance company may deal in bad faith if it denies a claim when the facts and law are clear that the insurance company should pay.
An insurance company may also be accused of bad faith if it fails to investigate a claim promptly and objectively.
On the other hand, bad faith would be difficult to prove in a case where an insurance company has a valid reason to question whether it should have to cover a claim.
Alabama residents who feel that an insurance company has been unfair should evaluate their legal options carefully.