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Chapter 10: Insurance Bad Faith

A person purchases insurance to protect himself or herself from
financial risks and unexpected events. Automobile insurance companies
have a duty to help protect their insured from claims and lawsuits from

others and to pay damages a claimant may suffer as a result of an
automobile accident.
When an insurance company receives a claim, the insurance

company has a duty to investigate the claim fairly and promptly. If a
lawsuit is filed, the insurance company has a duty to protect the insured

individual’s interests by defending the suit, and to attempt to settle the case
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in good faith. Once you have filed a claim, the insurance company will
request access to medical information describing any injuries, medical

treatments, and other documents as described in Chapter 7. Once you
have completed your medical treatment or once you achieve Maximum

Medical Improvement (MMI), your attorney should send the insurance
company a settlement demand letter. An insurance company should
consider this offer and decide in good faith whether to accept the demand,

make a different offer, or to deny the demand completely.
To determine whether an insurance company has acted in good
faith, each case must be examined individually. Usually, a court will

consider whether proposed settlements were rejected after deliberate
evaluation and whether there were other reasons for rejecting settlement
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offers. An insurance company will be considered to have acted in bad
faith if it delays or takes an unreasonable amount of time to respond to a

17 Gingold v. Government Emp. Ins. Co., 283 S.E.2d 614 (1981),
judgment rev'd on other grounds, 288 S.E.2d 557 (1982).
18 Smoot v. State Farm Mut. Auto. Ins. Co., 299 F.2d 525 (5th Cir. 1962).
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