In bad faith insurance cases, bad faith means that the insurer has no reasonable basis to deny coverage or delay payment for a claim. If you have been denied insurance benefits by your insurer and want to know what your next steps are, then this is the blog post for you! This article will cover bad faith insurance laws in Mississippi including timelines and requirements for adjusting and paying claims. We’ll also go over what bad faith really means. Lastly we’ll look at some of the most common examples of bad faith insurance claim handling so that you can get an idea of how your situation may be handled if it were to happen again in the future.
What Is Bad Faith Insurance in Mississippi?
The term “bad faith” is mentioned often when people discuss problems with their insurance companies. While this general understanding is accurate, it is important to understand that bad faith insurance is legal term that refers to when an insurer mishandles your claim in a very specific way. Importantly, an insurance policy represents a contract by which the insurance company is obligated to handle your claim in a professional manner and promptly pay undisputed amounts owed. An insurance company is obligated to comply with the terms of the policy as well as Mississippi law.
An insurer in Mississippi may have acted in bad faith if it improperly denied a claim
If you’re a current customer, then we recommend contacting your insurer about the situation so that they can address any issues on an individual basis. It’s important to remember that just because the law requires bad faith insurers to provide coverage does not mean that they have to do it for free or without penalizing insureds who are found guilty of bad acting. They may be required to pay some penalties but these will often depend on whether they acted with malice or if their decision was negligent which means accidental evil as opposed to intentional.
Mississippi’s Duty of Good Faith
Mississippi Courts have stated that an insurance company has a common law duty to act with good faith in handling an insurance claim. When an insurance company acts in bad faith, punitive damages may be owed to the policyholder. The Mississippi Supreme Court has explained that a policyholder must prove the following to show that an insurance company acted in bad faith:
- The insurance company lacked an arguable or legitimate basis for denying the claim; or
- Committed a willful or malicious wrong; or
- Acted with gross and reckless disregard for the insured’s rights.
The purpose of punitive damages is to punish the insurance company by forcing it to pay above what it owed on the claim.
It is important to understand that not every misstep by an insurance company amounts to bad faith. For example, the fact that an insurance company only paid 75% of what you thought you needed to repair your property may not amount to bad faith if the insurance company had a legitimate reason to pay what it did. The fact that an insurance company’s decision to exclude a portion of your claim may not warrant an award of punitive damages if the court finds it made the decision in good faith.
What does that mean? An insurance company owes its customers a duty not only to provide coverage but also to process claims fairly. The law defines this broadly and doesn’t give specifics about what constitutes fair treatment under bad-faith insurance laws because it would depend on each individual case. As a rule of thumb, the more shocking the conduct by the insurance company, the more likely it has acted in bad faith.
Prompt Payment Deadlines in Mississippi
Mississippi Code 83-9-5 provides the timelines for an insurer to adjust and pay a claim. This law states that an insurer must present proof of loss forms to its insured within 15 days of receiving notice of loss. In other words, the insurance company must provide necessary documentation to the insured so detailed claim information can be submitted to the insurance company to assist in the prompt adjustment and payment of the claim.
Proof of loss essentially is all evidence you should present to an insurer to support your claim. In addition to a sworn statement in proof of loss, you should also submit estimates, engineer reports, photographs, videos, and other evidence that would establish that a loss occurred as well as the amount of money it will cost to make repairs. For disability or injury claims, medical reports and doctor statements are normally the best evidence to establish entitlement to payment.
Presenting sufficient proof of loss to an insurance company is important in Mississippi. The timelines for an insurer to pay a claim do not begin until proof of loss is submitted.
In Mississippi, there are two recognized ways to present proof of loss – electronically and in writing.
If the proof of loss is submitted electronically, there must be a notarized written statement from the insured. In that case, it should show:
- The date and time of submission;
- A description of what was presented to establish liability or entitlement for payment;
- The amount paid so far towards the claim.
If the proof of loss is submitted in writing, there must be a notarized written statement from the insured. In that case, it should show:
- The date and time of submission;
- A description of what was presented to establish liability or entitlement for payment;
- Proofs substantiating the claim.
Once proof of loss has been submitted, the insurance company has an obligation to pay any undisputed amounts within the statutory time period.
An insurance company that fails to pay a claim within the statutory time period may owe interest and attorney’s fees.
When Can You File a Bad Faith Lawsuit in Mississippi?
Miss. Code Ann. § 83-11-59 states that a party may file an lawsuit for bad faith against an insurer within four years of the insurance companies bad faith. The date that the timeline begins depends on the specific facts of your case. For example, in many cases, the deadline begins when the claim is initially underpaid by the insurance company, a claim is denied, or misrepresentation is made. However, the deadline to file suit is fact intensive concept. You should consult with an attorney if you believe you need to file suit on your claim soon.
What Damages Are Available for Bad Faith?
Extracontractual damages are available in Mississippi for bad faith. These damages are meant to penalize insurance companies that have acted in bad faith and provide an incentive to pay legitimate claims in a timely manner. If an insurer is found to have acted in bad faith, the insurance company must pay three times the amount of damages sustained. In other words, an insurance company may be liable to its insured for $300,000.00 if $100,000.00 was owed on the claim.
In addition to bad faith claims, you can also pursue intentional infliction or injury for fraud and/or misrepresentation against an insurer based on bad faith actions in Mississippi.
Examples of Bad Faith Insurance
Certain practices by the insurance industry can be construed as acting in bad faith. Bad faith claims often depend on the specific facts of an individual claim. Examples of bad faith practices include:
- Denying a claim when the insurer knows that it is liable for payment.
- Raising exclusions that do not apply to the facts of the claim.
- Raising policy exclusions as a basis for denial without obtaining proper support for those exclusions.
- Refusing to investigate claims promptly and diligently.
- Requiring the insured to produce unnecessary documents to investigate the claim.
- Delaying a claim determination by failing to hire qualified individuals to investigate.
Schedule Your Free Consultation
If you believe your insurance claim has been delayed, denied, or underpaid, contact us to schedule a free consultation. We can be reached 24/7 at (866) 970-0977.
