What if the Insurer Uses “Bad Faith” Tactics in a Virginia Auto Crash Case?

When an insurer uses “bad faith” tactics in a Virginia auto crash case, it means they have violated their legal duty to act fairly and honestly with you. This can involve unreasonably delaying your claim, failing to conduct a proper investigation, or refusing to pay a valid claim without a reasonable basis. If you can prove the insurance company acted in bad faith, you may be able to recover not only the benefits you were originally owed but also additional damages, including attorney’s fees and costs.

After a car crash, you expect your insurance company—or the at-fault driver’s insurer—to handle your claim fairly and promptly. You pay your premiums and trust that they will uphold their end of the bargain. Unfortunately, that is not always how it works. Sometimes, in an effort to protect their bottom line, insurance carriers engage in “bad faith” tactics, leaving injured victims in a difficult financial and emotional position.

What is Insurance Bad Faith?

Insurance bad faith refers to an insurer’s attempt to avoid its obligations to a policyholder or a third-party claimant. An insurance policy is a contract. When you file a claim, you are asking the insurer to fulfill its contractual promise. In Virginia, every insurance contract includes an implied duty of “good faith and fair dealing.” This means the insurance company must treat you honestly and fairly when investigating, evaluating, and paying your claim.

When an insurer unreasonably and intentionally fails to meet this obligation, it may be acting in bad faith. This is more than just a simple disagreement over the value of a claim; it involves conduct that is unfair, deceptive, or designed to wrongfully deny you the benefits you are owed.

What is the Difference Between a First-Party and Third-Party Bad Faith Claim?

Understanding the type of claim you have is important, as the rules in Virginia differ for each.

• First-Party Claims: This is a claim you file with your own insurance company. For example, if you use your MedPay coverage, uninsured/underinsured motorist (UM/UIM) coverage, or collision coverage, you are making a first-party claim. Your insurer owes you a direct contractual duty to act in good faith.
• Third-Party Claims: This is a claim you file against the at-fault driver’s insurance company. In this scenario, you do not have a direct contract with that insurer. While they still have a duty not to engage in certain unfair practices, the legal standard for proving bad faith against a third-party insurer in Virginia is different and, in some ways, more limited.

How Can I Recognize Potential Bad Faith Tactics?

Insurance companies are businesses, and it is standard practice for them to investigate claims thoroughly. However, certain behaviors cross the line from due diligence into bad faith.

Here are some common examples of bad faith tactics:

• Unreasonable Delays: The insurer takes an excessive amount of time to investigate or make a decision on your claim without providing a valid reason.
• Failure to Investigate: The company refuses to conduct a reasonable investigation into the facts of your case or ignores evidence that supports your claim.
• Lowball Settlement Offers: The adjuster offers a settlement that is significantly less than the known value of your claim, hoping you will accept it out of desperation.
• Misrepresenting the Policy: The insurer intentionally misinterprets the language in the insurance policy to deny or reduce your coverage.
• Refusal to Defend: In a situation where you are being sued after an accident, your own insurance company refuses to provide a legal defense as required by your liability policy.
• Demanding Unnecessary Documentation: The carrier repeatedly asks for duplicative or irrelevant information to create delays and frustrate you into dropping the claim.
• Failing to Communicate: The adjuster does not return your calls or emails in a timely manner or fails to provide updates on your claim’s status.
• Threats or Intimidation: An adjuster uses threatening language or implies that your rates will skyrocket if you do not accept their low offer.
• Not Providing a Reason for Denial: The insurance company denies your claim without giving a clear, written explanation based on the policy and the facts.

It is important to remember that not every denied claim is an act of bad faith. If there is a legitimate dispute over the facts or the interpretation of the policy, it may not rise to this level. The key is whether the insurer’s conduct was unreasonable and intentional.

What Does Virginia Law Say About Insurance Bad Faith?

Virginia has specific laws that address how insurance companies must handle claims. The primary statute is the Unfair Claim Settlement Practices Act. This law outlines a list of actions that are considered unfair practices if committed frequently enough to indicate a general business practice.

Some of these prohibited acts include:

• Misrepresenting facts or policy provisions relating to coverages at issue.
• Failing to acknowledge and act reasonably promptly upon communications with respect to claims.
• Failing to adopt and implement reasonable standards for the prompt investigation of claims.
• Refusing to pay claims without conducting a reasonable investigation.
• Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.

While this Act sets the standard, Virginia law does not allow an individual to directly sue a third-party insurer for violating it. Instead, bad faith actions are typically pursued through a breach of contract claim against your own insurer (first-party) or are based on common law principles.

What Compensation is Available in a Bad Faith Case?

If you successfully prove that your own insurance company acted in bad faith, you may be entitled to recover more than just the original benefits of your policy. Under Virginia Code § 38.2-209, if an insurer denies, refuses, or fails to pay a first-party claim and a court finds the failure was not in good faith, you can be awarded:

• Your original claim amount.
• Reasonable attorney’s fees and costs incurred in pursuing the action.
• Interest on the unpaid claim.

This ability to recover attorney’s fees is significant, as it helps level the playing field between an individual and a large insurance corporation.

What Should I Do if I Suspect Bad Faith?

Your actions can make a difference if you believe an insurer is not treating you fairly. Protecting your rights involves careful documentation and clear communication.

• Keep Detailed Records: Document every interaction with the insurance adjuster. Note the date, time, who you spoke with, and what was discussed.
• Communicate in Writing: Whenever possible, communicate through email so you have a written record. If you have a phone conversation, send a follow-up email summarizing the discussion.
• Do Not Provide a Recorded Statement: You are not obligated to give a recorded statement to the at-fault driver’s insurance company. It is often best to decline until you have spoken with an attorney.
• Organize Your Documents: Keep all accident-related documents in one place, including the police report, medical bills, photos of the scene, and correspondence with the insurer.
• State Your Position Clearly: If you believe the insurer is wrong, state your position calmly and clearly in writing. Reference specific facts or evidence that supports your claim.
• Never Sign Away Your Rights: Do not sign any settlement agreements or releases without fully understanding what you are agreeing to.

How Can a Lawyer Help with a Bad Faith Claim?

Navigating a bad-faith insurance dispute requires a detailed knowledge of Virginia insurance law and the tactics that carriers use. An experienced attorney can be your most important advocate.

A knowledgeable lawyer can:

• Evaluate the Insurer’s Conduct: They can analyze the insurance company’s actions to determine if they meet the legal standard for bad faith in Virginia.
• Handle All Communications: Your attorney can take over all communications with the insurance company, preventing adjusters from using tactics to undermine your claim.
• Gather Necessary Evidence: They can collect the evidence needed to prove both your underlying car accident claim and the insurer’s bad faith actions.
• Challenge Unfair Denials: If your claim has been wrongfully denied, a lawyer can file a lawsuit to hold the insurer accountable.
• Negotiate from a Position of Strength: Insurance companies take claims more seriously when a respected law firm is involved. An attorney can negotiate for a fair settlement that includes all the compensation you are owed.

Protecting your rights after a car accident is about holding the responsible parties accountable, and that includes insurance companies that fail to live up to their legal and contractual duties.

Contact Pack Law Group for a Consultation

If you are dealing with an auto insurance claim in Virginia and believe the company is using unfair tactics, you do not have to face them alone. It is vital to get legal advice to protect your rights and your financial future. The team at Pack Law Group is dedicated to helping individuals stand up to insurance companies that act in bad faith. We have the experience to meticulously review the facts of your case, advise you on your options, and build a strategy aimed at achieving the best possible outcome. 

Call our firm today at 540-586-7225 or fill out our online contact form to schedule a meeting with one of our attorneys.