Why do we take out insurance policies? We do it to protect ourselves and the ones we love. When we purchase insurance, our insurers promise to defend us from sudden financial expenses we can’t pay. If we are hurt in an accident, receive a medical diagnosis that requires costly care, or our homes are damaged by forces out of our control, we face costs we can’t afford out of pocket. But by the terms of our agreement, our insurance companies should be there to help us afford these unexpected expenses.
So what happens when an insurance company doesn’t live up to its promises? What can we do when the time comes to pay and the insurance company isn’t there to protect us? A Chicago insurance bad faith lawyer from Thomas Law Offices can help you find answers.
We represent clients in the greater Chicago area, Cook County, and throughout the state. Our law firm skillfully represents clients filing complex Illinois bad faith insurance claims and lawsuits. Contact us below to schedule a free consultation.
Table of Contents
What Is a Bad Faith Insurance Claim?
To understand insurance bad faith, we must first look at the concept of “good faith.”
Good faith, or the “implied covenant of good faith and fair dealing,” is a rule followed by most courts in the United States. This rule requires every party in a contract (such as between an insurance company and a policyholder) to adhere to the agreement as intended, without using any deceptive means to undermine the contract’s purpose.
In other words, those who enter into a contract must do what they promise to do.
The term “bad faith,” then, is the opposite of good faith. It refers to when an insurance company fails to uphold the terms of the contract. Bad faith is when an insurance company acts in a way that is not honest, fair, or reasonable to the insured party.
This type of misconduct is illegal, and our team of Illinois bad faith insurance lawyers fights to protect policyholders from harmful bad faith practices.
We’ll take a more in-depth look at how Illinois law defines bad faith below, but some of the most common examples of how large insurance companies act in bad faith include:
- Denying claims without a valid reason
- Purposely delaying payment on valid claims
- Failing to communicate with claimants
- Withholding information, lying, or purposely misleading policyholders with vague language
The Legal Obligations an Insurance Company Owes to Policyholders
The Illinois Insurance Code is an extensive set of laws governing the operations of insurance companies that provide coverage to policyholders, claimants, and beneficiaries in Chicago and throughout the state. These laws standardize all practices ranging from policy limits to market competition to collecting insurance premiums from policyholders, and much more.
What Are Insurance Bad Faith Practices?
Section 215 ILCS 5/154.6 lists the types of practices that can be considered to be acts of bad faith. According to this Illinois statute, any one of the following actions committed by an insurance company, without just cause, is considered to be an “improper claims practice”:
- Knowingly misrepresenting facts related to coverage
- Failing to promptly acknowledge communications related to claims
- Failing to adopt and implement reasonable standards for prompt investigation and settlement of claims
- Not settling claims promptly and fairly when liability becomes reasonably clear
- Forcing policyholders to initiate lawsuits to recover what is rightfully due under the policy by offering a substantially lower amount
- Engaging in any activity that results in a high number of complaints filed with the Illinois Insurance Department against the company
- Refusing to pay claims without conducting a reasonable investigation
- Failing to affirm or deny coverage of claims within a reasonable amount of time
- Attempting to settle a claim for less than what a reasonable person would deem appropriate based on the advertising materials, application, and other information provided by the insurance company
- Establishing unreasonable caps or limits on paint or materials when estimating vehicle repairs
- Attempting to settle claims on the basis of an application which was changed without notifying or obtaining consent from the policyholder
- Making a claims payment to a policyholder (or beneficiary) omitting the coverage under which each payment is being made
- Delaying investigation or payment of a claim by demanding an insured, claimant, or physician submit a preliminary claim report, followed by subsequent formal proof of loss forms, resulting in the duplication of verification
- Failing to provide a reasonable and accurate explanation for a claim denial or compromise settlement offer
- Failing to provide the forms necessary to submit claims within 15 working days of a request, and failing to provide explanations about how to use them effectively
- Failing to adopt and implement reasonable standards to verify that an auto repair professional assigned by the insurance company to provide an estimate, perform repairs, or provide other services related to the claim meets the licensing standards of the Illinois Vehicle Code (or failing to provide notice on an estimate provided to the claimant that auto repair professionals must meet these licensing standards)
- Failing to pay for a replacement vehicle or any other required occupation tax, title, or transfer fees
- Engaging in any other acts similar to those listed above
Why Do Insurance Companies Use Bad Faith Practices?
You’ll notice that the word “promptly” is used frequently in the list above. That’s because one of the most common tactics insurance companies use to save money is dragging their feet when processing a claim.
Companies often engage in tricks like unreasonable delays, long periods of dropped communication, and repeated requests for more paperwork. These and other “stalling tactics” are done with the goal of pushing payment dates farther and farther out.
These tactics are used for a reason—they work.
Insurers bank on the fact that policyholders will become so frustrated by the claims process that they will eventually agree to a settlement that is substantially lower than what they deserve.
Many claimants find themselves in a financially unstable predicament, eager to settle as quickly as possible in order to get out of debt and pay off medical bills or auto repair costs. Insurance companies take full advantage of the vulnerable position many policyholders are in. And, they know most people don’t have a full understanding of their rights granted by Illinois insurance statutes.
Sadly, many of the “improper claims practices” described above are standard operating procedures for big business insurance companies.
What Does a Bad Faith Insurance Lawyer Do?
The job of a bad faith insurance lawyer is to:
- Inform and guide victims of bad faith on their rights and legal options
- Defend the rights of policyholders, claimants, and beneficiaries
- Ensure that corporations are not violating insurance laws
- Help claimants achieve fair dealing in their case
- Hold insurance companies liable for breaking state and federal statutes for ethical business operation
At Thomas Law Offices, we treat each bad faith case we handle with the individualized care and attention it deserves. We know the nature of our work is both broad and personal—we help hold the entire insurance industry to higher standards, while changing each individual client’s life for the better.
To give your bad faith case the best chance of success, we will handle every stage of the legal process with expertise and dedication. The Chicago bad faith insurance attorney team regularly performs the following actions to help clients win cases and recover fair compensation:
- We investigate claims and determine if a company acted in bad faith.
- We analyze insurance policies to ascertain policyholder rights.
- We look for loopholes that a company may exploit, holding them liable for dishonesty.
- We calculate the full and fair compensation our clients deserve, and help them win it.
- We handle communications with the insurance company so our clients don’t need to fear bullying, trickery, or intimidation tactics.
- We interpret and apply the state and federal laws that govern a bad faith case.
- We take legal measures to win justice, filling out and submitting necessary documents, paperwork, and evidence for our clients within all mandatory deadlines.
- When needed, we represent our clients in court and put into action our combined decades of success as recognized Chicago trial attorneys.
First-Party vs. Third-Party Bad Faith Insurance Claims
First-party claims are those filed against your own insurance company.
Third-party claims are those filed against another person’s or business’ insurance company.
Illinois bad faith insurance laws only address the filing of first-party bad faith claims. This is because a contract only exists between you and the company that supplies your insurance policy. You do not have a contractual relationship with another person’s insurance carrier—that company, therefore, does not have the same legal duty to you as it has to its own policyholders.
Thus, if another party’s insurer’s actions result in financial harm to you, there are different legal actions that must be taken to recover your losses. While you cannot file a bad faith claim against another party’s insurance company, you can file a lawsuit in court against the responsible entity. This may entail a more complicated legal process, and we’ll look at how a case like this may need to be handled below.
How To Handle First-Party Bad Faith Insurance Cases
When you file a first-party claim with your insurance company after a home fire, auto accident, medical emergency, or other situation that requires you to make use of your insurance policy, the company has an obligation to treat your claim fairly. If that doesn’t happen, you may have the right to file a bad faith claim against the agency.
This process requires that you and your lawyer find the evidence to prove that your insurer’s conduct is “vexatious and unreasonable.” This is a deeply nuanced area of litigation, and your lawyer will need the legal acumen to successfully prove that the insurance company violated its duty and acted in bad faith against you.
There is an exception to your ability to file a first-party bad faith claim against your insurer: when an employer-sponsored benefits plan is involved. A federal law known as ERISA (Employee Retirement Income Security Act) bars most bad faith claims against employer retirement and health insurance plans for employees.
Please speak with a bad faith lawyer from Thomas Law Offices in person to discuss your legal options if your case involves an employer-sponsored insurance company.
Bad Faith When Your Own Insurer Does Not Protect You Against Third-Party Claims
If you are at fault for an incident that results in another person’s losses, you and your insurer may be financially responsible. Let’s say that your dog attacked a neighbor, and your homeowners insurance policy must now be put into action to cover the neighbor’s resulting medical bills.
When the injured party files a third-party claim with your insurance carrier, the company is responsible for defending you. They do this by paying the claim (if it is a valid claim),and protecting you from both invalid claims and lawsuits that may be filed against you if the claim is not fairly paid out. If your company does not defend you properly, it can lead to this specific type of bad faith case.
How To Handle Third-Party Bad Faith Insurance Cases
You cannot file a bad faith insurance claim against an insurance company that does not represent you. You may instead have the option to file a lawsuit directly against the person or business responsible for your damages.
But there is also a unique law in Illinois known as the law of “assignment,” which may allow you to pursue or recover the verdict of a bad faith claim against another insurance company (not your own) with which you filed a third-party claim.
Assignment of Bad Faith Claims in Illinois
Illinois is one of the states in which the law of assignment may apply to a bad faith claim. This is a complicated legal maneuver, but it may be a way to recover your losses if another party’s insurance agency acted in bad faith.
The right to bring a bad faith claim against the company belongs to the covered party, because it is their insurance provider, not yours. But you are the one who needs compensation. So the policyholder can “assign” you the right to file the bad faith action.
This often applies to cases in which the policyholder’s assets, to a degree exceeding the amount of insurance protection, will be vulnerable to a lawsuit if the insurance company rejects reasonable settlement offers without a valid reason. In such a case, refusal to accept a reasonable settlement fails to protect the policyholder by exposing them to being sued.
While this is a simple explanation of this doctrine, the exact cases in which it may apply must meet certain criteria. We cannot guarantee that the law of assignment will apply to your case until we first meet to evaluate your legal options. Schedule a free consultation to learn more from a qualified attorney at Thomas Law Offices.
Types of Insurance Coverage in Bad Faith Claims
Thomas Law Offices can evaluate your insurance policy and claim complications at no cost to you. We handle Chicago bad faith insurance cases related to:
- Auto insurance
- Health insurance
- Homeowners insurance
- Renter’s insurance
- Life insurance
- Long-term or short-term disability insurance
- Small business insurance
- Property insurance
- Long-term care insurance
- Other types of insurance policies
While bad faith insurance claims can happen under any type of coverage, there are two types of policies that are most frequently involved in Illinois bad faith cases: auto insurance and health insurance.
Auto Insurance Bad Faith Claims
Every motor vehicle registered and operated in Illinois must be covered by liability insurance of at least these minimum coverage amounts:
- $25,000 for injury or death of one person
- $50,000 for injury or death of more than one person
- $20,000 for damage to property of another person
With 1,650,770 active registered vehicles in Cook County and more than 295,000 roadway accidents in Illinois in 2021, auto accident claims are one of the most common types of insurance claims filed in Chicago.
Our law firm can partner you with a Chicago bad faith auto insurance attorney if you are experiencing unreasonable challenges in your motor vehicle accident claim.
Health Insurance Bad Faith Claims
When a health insurance company denies payment of a valid claim, it can have a devastating effect on the claimant’s life. More than any other type of insurance coverage, health insurance protects the personal well-being of policyholders when their health and lives are at stake.
The control insurance companies have over health care providers often tacks on an added hurdle that prevents many patients from receiving timely and effective medical care.
How the Health Insurance Approval Process Harms Patients
Doctors and other medical professionals use their education, training, and experience to make medical decisions. But in a health care system dominated by profit-driven insurance companies, physicians are forced more and more to validate their diagnoses and treatment plans to insurance providers that continually question whether the decisions are medically necessary or not.
In short, insurance companies often have the final say on the treatment a patient can receive. If manipulative health insurance practices stand in the way of patient care, a sick individual can be denied a life-saving treatment.
This specific type of health insurance dispute is an intricate legal process. Most personal injury attorneys do not take on these types of cases due to their complexity.
Thomas Law Offices in Chicago, IL is proud to devote an area of our practice to Prior Authorization (PA) health insurance disputes. Please schedule a free consultation to discuss your case with one of our experienced attorneys who focus on these challenging legal cases.
You can also read more about how insurance company practices delay patient care and cause more adverse outcomes in the health care system.
If your health insurer acted in bad faith, a Chicago health insurance dispute lawyer from our legal team can analyze your insurance policy and investigate your case to aid you in reaching a resolution that aligns with your best interests.
What Compensation Can You Recover Through a Bad Faith Insurance Claim?
Below are the benefits you may be entitled to recover through a first-party bad faith claim or a third-party bad faith lawsuit.
Recoverable Benefits in a First-Party Bad Faith Claim
Illinois insurance statute 215 ILCS 5/155 specifies the benefits to which a plaintiff may be entitled through a first-party bad faith insurance claim. Recoverable benefits in a first-party claim are:
- Attorney fees
- Other related costs
- A financial award that does not exceed one of the following:
- 60% of the amount the court or jury determines you are entitled to,
- $60,000, or
- The excess of the amount the court or jury determines you are entitled to receive above the amount (if any) that the insurance company offered in settlement before legal action.
Recoverable Benefits in a Third-Party Lawsuit
If you are filing a third-party lawsuit directly against another party, you are not limited in the amount or type of damages you can recover.
By filing a third-party lawsuit, you seek a fair settlement for financial losses in the form of economic and non-economic damages. Your case will be presented before a judge (and usually a jury) who will reach a verdict about the amount of compensation that is fair and equitable in your case. In a very small number of cases, punitive damages may also be applied.
Punitive damages are only awarded when there is clear and convincing evidence that the defendant acted “with evil motive or with a reckless and outrageous indifference to a highly unreasonable risk of harm and with a conscious indifference to the rights and safety of others.” They are only an option if actual (compensatory) damages have first been approved, and they may not exceed three times the amount awarded in economic damages.
Punitive damages are not often applied in personal injury lawsuits, and you will need to speak with an experienced attorney about the individual merits of your case to determine whether your case is eligible. Please schedule a free consultation with one of our bad faith insurance attorneys to learn more.
How Long Do You Have To File a Bad Faith Insurance Claim in Chicago?
Under non-exceptional circumstances, you are given two years under Illinois law to file a Chicago bad faith claim. The two-year deadline typically starts from the date you discovered your claim was wrongfully denied, or when the insurance company failed to uphold their legal obligations to you as a claimant.
This date may be difficult to establish, depending on the details of your case. Be sure to save any and all documentation and communications you receive from your insurance carrier.
Contact a bad faith insurance attorney as soon as you learn of issues related to your claim.
This is the best way to make sure you have plenty of time to consider and pursue legal options without missing a vital deadline. Additionally, evidence to support your claim becomes more difficult to secure as time passes. Don’t delay in establishing a relationship with a legal advocate who can represent you in your Chicago insurance bad faith case.
Top-Rated Representation for Chicago Bad Faith Insurance Claims
At Thomas Law Offices, our compassionate legal team has helped many clients and their family members through the difficult process of holding an insurance company liable for harmful misconduct.
The bad faith insurance lawyers from our law office want to help, and we have the legal resources to effectively render aid in your situation.
Thomas Law Offices continues to be one of the most highly respected law firms in the greater Chicago area, and we pride ourselves on the guidance and advocacy we provide to victims of bad faith in our area.
Speak With a Bad Faith Insurance Lawyer at No Cost to You
In line with our commitment to support clients’ rights, we don’t charge a fee for a free initial consultation to learn your rights and options. And we don’t collect our attorney’s fees until we win your case. Our contingency fee model allows us to give legal support to those who need it, regardless of their ability to pay for representation upfront.
Let us begin working for you. Contact a Chicago insurance bad faith lawyer today. We’ll match you with an attorney who focuses on health insurance disputes, auto insurance bad faith, third-party lawsuits, or another type of insurance dispute you are currently experiencing.
Call or fill out our no-obligation contact form.
Who We Are
Reviews
