It is not unusual for an insurance company to limit or even deny coverage of a claim without proper justification or warning. Not every act of an insurance company with which you disagree is bad faith, but if you have been treated unfairly and have been denied coverage or a reasonable settlement wrongfully, you may have a case for bad faith against your carrier.
The question is, how do you know?
You can always file a complaint with your state's Department of Insurance, but only by hiring a qualified attorney who specializes in insurance bad faith will you be able to get high-quality advice regarding whether or not the insurer's actions fall within the definition of bad faith, and whether or not you have a case. Keep in mind that state, not federal law, regulates insurance practices. There is no uniform definition for insurance bad faith. An experienced attorney in this field knows the law in your state, and will be able to assist you.
In the United States, it is the general rule of law that each party pays its own attorneys' fees, referred to as "The American Rule," differing from the English Law which requires only the responsible party to pay the fees for both sides. Some states, however, have carved out judicially created exceptions to the American Rule, one of which allows for the wronged party in an insurance bad faith lawsuit to be granted attorneys' fees as part of the award. Such exceptions exist at least in New York, Pennsylvania and Utah. Again, an experienced attorney will be able to advise you regarding whether or not attorneys' fees will be included as part of the award in your state.
In bad faith cases, where the American Rule applies, the vast majority of attorneys will work on a contingency fee basis; that is, they will take a percentage of the settlement or award as their fee. If you lose your case, you pay nothing but their costs for such things as materials, copying, phone calls, etc. Make sure that you completely understand how the fees are to be paid before you hire legal counsel.
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