So you finally got a case in which you’re just certain the insurance company is acting in bad faith . . . What do you do now? Protect it! In a case where you think you’ve caught the insurance company red-handed for acting in bad faith, it is crucial that you take the steps to document the insurance company’s actions from the insured’s perspective before a lawsuit is filed.
First, obtain a certified copy of the insurance policy and read it thoroughly. In every insurance policy I’ve ever read, there will be a section entitled "Duties After Loss" or something similar. These apply to the insureds. For example, insureds have a duty to cooperate, a duty to protect the property from further loss, etc. Confirm that the insured has complied with all such duties and then send a letter to the insurance company to document the fact that the insurance company does not contend that the insured has failed to fulfill his or her contractual duties. If the company disputes the contention, resolve the problem and then send another letter.
Second, don’t forget to instruct your client to keep a timeline recording all of the relevant events that lead to the conclusion that the insurance company is acting in bad faith. Third, send a very nice, personable letter to the insurance company stating that your client is willing to do whatever is necessary to assist with the speedy adjustment and resolution of the claim. Pour it on thick – – and mean it. Finally, send a bad faith demand letter to the insurance company via certified mail.
All of the communications to the insurance company should be professional and display patient cooperation. Be courteous, yet firm. If anyone is going to use ugly language or overbearing settlement tactics, make sure its the insurance company. Remember that the letters will be read by not only the insurance adjuster, but also by the judge or jury if litigation becomes necessary. And there is nothing that an insurance company hates worse than to have a nice, super-helpful and cooperative letter from the insured to the adjuster read to a jury when it knows it really screwed a case up.