Insurance companies have been criticized recently due to the fact that they have failed to pay claims even though a legitimate claim is present. When a liable party is involved in a car accident, the job of the insurance company is to defend the person under most circumstances. A serious problem in this industry is that insurance companies look for any reason not to pay a claim, and this is giving rise to litigation regarding “bad faith” of these companies.
A bad faith claim is present when an insurance company, that has a duty to settle for a certain policy limit, fails to pay a claim after being notified of the claim. In South Carolina, a person may make a demand to his or her insurance company to settle for the policy limits in order to resolve the case. This is also known as a “Tyger River” demand, which derives from the case Tyger River Pine Co. v. Maryland
This doctrine discusses the consequences an insurance company may face if they fail to protect the insured liable party when he or she is attempting to settle within the contract limitations Tyger Pine Co.v. Maryland Casualty Co., 170 S.C. 286.(1933)
He the insurer will be forced to provide the total amount recovered at trial, even if it exceeds the amount of insurance available under the policy limitations. This is to encourage the insurance company to settle when a reasonable offer is presented; and, to protect the insured party when they do not.
“Bad faith” is shown when four elements are proven: (1) a contract is formed; (2) the insurer refuses to pay benefits under the contract; (3) the results from the insurer’s bad faith or breach of implied covenant of good faith and fair dealing; and finally, (4) damages were incurred by the insured.
An example would be if you had a loss due to a car accident, and the insurance company failed to cover you, you would have to prove these elements in order to recover for a bad faith action. However, the dilemma lies in the fact that the insurance company does not have to perform until a verdict has been entered in excess of the policy limitations. Then the insurance company waits until a trial for a reasonable settlement. This complicates the process and beckons the need for legal counsel.
If you or a loved one has been injured in a car accident it is prudent to seek an attorney to ensure that the insurance company is paying an appropriate sum given the procedural limitations. For a confidential consultation, contact the law offices Reeves, Aiken & Hightower, LLP toll-free at 877-374-5999.