In some instances when a claim is made on an insurance policy, an insured may believe that the insurer has acted in bad faith in settling that claim. Bad faith may occur through a delay in settling an insurance claim as well as the outright denial of the claim. An insurance company that acts in bad faith in the settlement of a claim may be forced to pay the insured for those actions.
Claims under the Insurance Code
Under the Illinois Insurance Code (§155), it is possible to recover a statutory penalty, attorney’s fees, and other costs if an insurer fails to fulfill its obligations in an unreasonable manner after a claim is made.
Specifically, an insured must prove that there was a delay in settling the claim that is vexatious and unreasonable. Determining if the delay is vexatious and unreasonable requires an examination of the totality of the circumstances. Some of the factors that are considered include the attitude of the insurer, whether the insured had to file a lawsuit to recover, and whether the insured was deprived of his or her property for a period of time.
The amount that may be recovered as a penalty under §155 violations cannot exceed any of the following:
- Sixty percent of the amount which the court or jury finds the insured is entitled to recover against the insurance company;
- $60,000; and
- The excess of the amount that the court or jury finds the insured is entitled to recover, exclusive of costs, over the amount that the insurance company offered to pay to settle the claim before the action.
The primary defense to a bad faith claim is that there is a bona fide dispute as to whether a policy provides coverage for the claim. If a bona fide dispute exists, denying or delaying in the handling of the claim is not considered a violation. Further, it has been held in Illinois that conduct of insurers is also vexatious and unreasonable when the insurer presents a legitimate policy defense, a genuine legal or factual issue as to coverage exists, or the insurer takes a reasonable legal position based on an area of law that is unsettled.
Action that Results in a Violation of §155
Conduct that leads to a violation of the duty of good faith and fair dealing includes, but is not limited to, the following:
- Knowingly misrepresenting relevant facts or insurance policy provisions;Not maintaining prompt and regular communication with the insured;
- Refusing to pay a claim (either in whole or in part) that the insurer acknowledges as being due;
- Settling a claim for less than what it is actually worth; and
- Failing to properly investigate a claim.
Insurance Dispute Attorneys
If you believe that your insurance claim has been delayed or denied in bad faith, it is important to reach out to an experienced Crystal Lake insurance dispute attorney. Our firm represents individuals in communities such as Schaumburg, Crystal Lake, Palatine, Des Plaines, Buffalo Grove, Rolling Meadows, Barrington, Arlington Heights, Inverness, and Deer Park.
About the Author: Attorney Ken Apicella is a founding partner of DGAA focusing in the areas of personal injury, employment, insurance coverage disputes, and civil litigation. Ken earned his J.D. from DePaul University College of Law in 1999. He has been named a SuperLawyers Rising Star and a Forty Illinois Attorneys Under Forty to Watch. Ken has written and lectured for the Illinois Institute for Continuing Legal Education and regularly serves as a moderator at Northwest Suburban Bar Association's Continuing Legal Education seminars.