What is insurance bad faith? What insurance regulations protect consumers from deceptive and illegal practices by insurance providers? When an insurance company's actions in a personal injury case violate state and federal law, this is considered "bad faith." Individuals in Kansas and throughout the country have the right to pursue claims against the insurance company for their actions when this happens.
Insurance providers owe a duty of good faith to their clients. This includes thoroughly investigating claims, providing reasonable legal defense in a personal injury case, and making prompt payment of any legitimate settlements or judgments against policyholders. It may also include the duty to defend a claim even when the lawsuit arises from accidents and injuries not specifically covered in the individual's insurance policy.
Under Kansas law following Spencer v. Aetna Life and Casualty, individuals cannot pursue bad faith insurance torts against an insurance company for first party claims, although they may do so for third party claims against the insurance carriers of other parties to an automobile accident.
The case of Bollinger v. Nuss, 202 Kan. 326, 449 P.2d 502 (1969) sets forth an excellent discussion of the duties imposed on an insurance company. One of those duties is to communicate to your insured. I frequently find that insurance companies pay no attention to this duty imposed under Kansas law and I hope that you have the sense of fairness to your insured to follow this duty. The Bollinger case held,
Syllabus 1. In defending and settling claims against its insured, the insurer of a liability or indemnity policy owes to the insured the duty to act in good faith and without negligence; failure to do so will result in the insurer being held liable for the full amount of the insured's resulting loss, even if that amount exceeds policy limits.
Syllabus 2. In this jurisdiction a liability insurer may be held liable in excess of its undertaking under the policy if it acts negligently or in bad faith when considering offers to compromise the claim against the insured for an amount within policy limits.
Syllabus 3. Whether the conduct of an insurer who rejects a settlement offer within the limits of its policy is measured by the good faith test or negligence test, the real question is the degree of consideration which an insurer must give to those interests of the insured which conflict with its own.
Syllabus 4. The rule in this jurisdiction is that in acting on offers of settlement within policy limits, the insurer may properly give consideration to its own interests, but it must also give at least equal consideration to the interests of the insured. This means that the insurer must evaluate the claim without looking at the policy limits and as though it alone would be responsible for the entire amount of any judgment rendered on the claim. Thus, under the negligence test the insurer must conduct itself with that degree of care which would be used be an ordinarily prudent person in the management of his own business, with no policy limits applicable to the claim. Likewise, under the good faith test, the insurer must in good faith view the situation as it would if there were no applicable policy limits.
Syllabus 5. Under either the negligence test or the good faith test much the same factors may be relied on in determining whether or not an insurer is liable for failing to accept an offer of compromise within policy limits. In the final analysis the question of liability depends upon the circumstances of the particular case and must be determined by taking into account various factors discussed in the opinion.
Syllabus 6. A duty is imposed on the insurer to communicate to the insured the results of any investigation indicating liability in excess of policy limits and any offers of settlement, so that the insured may take proper steps to protect his own interests.
The covenant of Good Faith includes the duty to investigate, evaluate, settle, communicate and otherwise act in good faith to the insured. In order to do so, individuals must establish the presence of malice, fraud, or utter disregard for the rights of policy holders or those of third parties who were injured in the automobile accident.
Insurance regulations in Kansas may help protect consumers from bad faith insurance practices. Under Kansas Statute 40-219, the penalties for engaging in untoward business insurance practices in Kansas can include injunctions against doing business in Kansas, fines, and potential incarceration for a period of up to six months. Further, Kansas Statutes 40-256 and 40-908 allow plaintiffs to recover compensation for attorneys' fees stemming from the pursuit of bad faith insurance claims. While these statutes help, most insurance carriers do whatever they can to delay payment and to minimize payment.
While there are many insurance regulations that help protect consumers from bad faith insurance actions, evidence is always required to establish such claims. This means consumers should always record conversations and critical details with insurance providers including names of people and dates when conversations occurred. Individuals should also keep thorough records of correspondence including emails, letters, faxes, etc. When it comes to establishing insurance bad faith in Kansas, no detail is too small or too insignificant to record. Also keep notes of when complaints are submitted to the Kansas Department of Insurance or the courts. In all cases, individuals should make multiple copies of the evidence to ensure that nothing gets lost as the claim is investigated and pursued.
Brad Pistotnik Law helps protect clients from bad faith insurance practices following accidents in Hays, Dodge City, Pittsburg, El Dorado, Wichita, Goodland, Hays, and throughout Kansas, Oklahoma, Nebraska, Illinois, and Missouri. Our firm diligently monitors changes to insurance regulations and represents clients whose claims are erroneously denied or delayed.
We are Brad Pistotnik Law. ® We are Abogado El Toro. ® Hire the real Brad. ® Call in the Bull. ® We are the Bull Attorneys! ™ Call us at 1-800-241-BRAD or call us on our local line at 316-684-4400. You can call Brad Pistotnik on his cell at 316-706-5020. You can call Tony Atterbury on his cell at 316-617-9237. You can call from Western Kansas at 620-THE-BULL. Our main office location is at 10111 E. 21st St. N., Suite 204, Wichita Kansas 67206. Our new second office is at 3102 E. Kansas Avenue, Suite 100, Garden City, Kansas 67846.