Bad faith and BI claims: The view from the plaintiff’s side
As the number of coronavirus cases continues to surge across the country, insurers are already seeing numerous lawsuits for bad faith and business interruption claims related to the virus. The issue of bad faith looms for many insurers that are denying claims or investigating them to determine whether coverage exists.
This edition of Insurance Speak features a conversation with Brian Kabateck, the founding and managing partner of Kabateck, LLP, a well-known law firm based in Los Angeles. Kabateck has successfully won significant cases for policyholders against multiple insurance companies and shares his insights on what carriers need to know to avoid costly mistakes and better serve their policyholders, so they don’t end up in litigation.
Approximately 6,500 lawsuits related to the pandemic have been filed across multiple industries, with almost 1400 of them involving the insurance industry. Kabateck says that the pandemic is a once in a generation event, and businesses are looking for ways to cover their losses. “Restaurants were decimated by the pandemic,” he shares and there is an ongoing debate on how business interruption coverage will be applied to these losses.
Numerous decisions have favored insurers; however, there have also been rulings in multiple states that went against them. Kabateck predicts that many of these decisions will ultimately end up in the various state Supreme Courts. “The best way to avoid lawsuits is to pay the claims and treat people fairly,” he advises.
Avoid these mistakes
When asked what issues seem to create the most dissonance between policyholders and carriers, Kabateck highlighted several problems he sees with some frequency.
Not all pricing is created equal. Ensure adjusters understand the anomalies inherent in a particular geographic area when pricing claims. Estimating programs are a tool but may not consider all of the pricing variants for charges unique to a locale.
Avoid musical adjusters. Assigning new adjusters to existing cases every few months does a disservice to the policyholder and the insurer.
No-pay claims. If a claim goes to court, jurors are not sympathetic to carriers who don’t pay even part of a claim.
To learn more about the red flags and factors insurers should watch to minimize the chances of having claims end up in litigation, listen to the podcast above.