In Tennessee, insurance bad faith occurs when an insurance company fails to act honestly and fairly in handling a policyholder’s claim. While insurers are permitted to investigate and deny claims that are not covered, they are also legally required to treat their policyholders with good faith and fair dealing. This means they must promptly investigate claims, communicate clearly, and pay valid claims without unnecessary delay. When an insurer unreasonably denies a claim, delays payment without justification, or uses deceptive or coercive tactics, the policyholder may have a bad faith claim under Tennessee Code Annotated § 56-7-105.
Under this statute, if a policyholder proves that an insurer acted in bad faith by refusing to pay a covered loss within 60 days of a proper demand, the insurer may be liable for additional damages up to 25% of the loss, in addition to the original amount owed. Tennessee law also allows policyholders to bring common law bad faith and breach of contract claims, which may open the door to full compensatory damages and, in extreme cases, punitive damages. Bad faith claims not only seek to recover the unpaid benefits but also aim to hold insurers accountable for wrongful behavior and deter future misconduct.
Insurance companies often delay claims by repeatedly requesting unnecessary documentation or information they already received. They may also assign multiple adjusters over time, causing confusion and forcing policy holders to start over. These tactics are designed to wear the policy holder down, hoping they will accept a lower payout or give up entirely.
After delaying the claim, insurance companies may then invoke a clause in the policy which states that the policy holder failed to mitigate their claim; therefore, it is denied. Insurance companies will also deny claims by interpreting policy language in the narrowest way possible, often using exclusions that do not fairly apply in the situation. They also claim the damage was caused by something not covered, even when the evidence and experts say otherwise. Sometimes, they will rely upon their own experts to justify denying legitimate claims without a thorough investigation.
If a lawsuit is filed against them, insurance companies defend claims by hiring their own attorneys and experts to argue that the damage is not covered or that the policy holder failed to meet certain conditions. They often question the value of the loss or claim the damage was pre-existing or caused by something outside the policy. Their goal is to minimize exposure and protect their bottom line, even if it means fighting their own policy holders in court.
We can dig into the claim file, internal communications, and insurer practices to uncover delay tactics, wrongful denials, or biased investigations
We can apply pressure through formal demand letters citing case law and statutes that require prompt and fair claim handling
If the insurer will not do the right thing, we can sue for not only the amount owed but also for punitive damages and attorney's fees
When fighting a billion-dollar corporation, we can force them into a courtroom where both sides are on equal playing fields and the court will force the insurance company to pay
