Much of the time, insurance companies that are sued for acting in bad faith are eager to defend themselves in court. To do so, it may be necessary to hire an attorney. A lawyer experienced in defending bad faith insurance claims can examine the evidence and refute the claim, or otherwise advocate on the insurer’s behalf.
What must a person whose insurance claim was denied do to convince the court that the denial was in bad faith? As in other legal areas, the law in Louisiana is somewhat different than in other parts of the United States.
Most states require that the plaintiff show that the insurance company acted with some combination of negligence -- that is, with substandard but unintentional conduct -- and intentional misconduct. In this context, “negligence” means that the insurer acted unreasonably toward the client. The second step is to determine whether the company knew it was being unreasonable and denied the claim anyway.
In Louisiana, on the other hand, the insurance company must have acted in a way that was “arbitrary, capricious or without probable cause” for the insured party to prevail. This rather lengthy legal phrase has been found to mean “vexatious.” Courts have interpreted this to mean the insurance company refused to pay a claim without and reasonable or probable cause, or excuse for doing so.
As this suggests, the company must have acted with more than mere negligence. Bad faith requires some amount of willful action.
Every bad faith claim is different, and an insurance company facing such a claim should consult an attorney for more detailed advice.