by NancyN

Created on: December 01, 2008   Last Updated: March 09, 2012

Personal injury lawsuits deal with compensation claims that arise from physical injury, medical malpractice, pain and suffering, lost wages, negligence, medical bills, and any other harms caused by another person or group entity. They can be initiated by a single person or can be entered as class-action lawsuits. Plaintiffs are often represented by contingency lawyers who do not charge up front but take a percentage of the award. Personal injury lawsuits seek to gain monetary compensation for the plaintiff in order to offset alleged damages. It's possible that the defendant's insurance company will settle out of court, but it's more likely the plaintiff will plead the case before a jury.

The defendant's insurance company is generally the party who is being asked to pay damages. This company is not indebted to the plaintiff, and will argue where possible to have the reward denied or reduced. While this is the job of the insurance company, there are obligations under the law that must be adhered to on the part of the insurance company to be sure a fair and reasonable claim will be paid.

The insurance company must be willing to honor what is legitimately owed. It must be willing to settle and pay the determined claim in a reasonable time frame. This comes under the headings of good faith and fair play. In California, a party who believes that an insurance claim has not been handled properly can file a complaint with the California Insurance Commissioner. Complaints to this body can cover, among other issues, unfair denials of claims and mismanagement of claims where the client did not receive a fair settlement due to the bad faith of the insurance company.

Bad faith is concerned with deceptive or fraudulent activity in a case, negligence in handling the case, and malicious intent to misrepresent facts. The California Insurance Code Section 790.03 and the California Code of Regulations give specific practices that are acceptable and unacceptable.

If a plaintiff's insurer accepts a settlement that is not in its client's best interest, or a settlement not within the terms of a policy, or if the insurer impedes the awarding of a settlement beyond a reasonable time, the insured has a right to bring a tort action against the insurer. It can be expensive if the client has to pay for this, but for those who cannot afford a lawyer there are, again, plenty of contingency lawyers available who specialize in bad faith cases against insurance companies.

A legitimate dispute regarding what a policy does or doesn't cover is not considered an act of bad faith. The California case of Wilson v. 21st Century Insurance Co. (2007) 42 Cal.4th 713 determined that an insurance company could dispute a claim on legitimate grounds without acting in bad faith, and could get a summary judgment regarding the dispute.

Where either side is concerned, the insurance companies have an obligation to deal with claims honestly. Claims must be paid if they are covered in a policy. There must be a reasonable attempt to gather facts before a claim is denied, and a willingness to pay a legitimate claim within a reasonable time frame. The insurance company must not offer less than the claim is legitimately worth or pressure the plaintiff or coerce the plaintiff into accepting, and must supply all information that is important to the case. Standards such as the ones laid out above help to protect the insurance consumer by keeping the insurance industry as legitimate and ethical as possible, and ensuring that the insurance companies cover properly and fairly those things that they are obligated to cover by law and agreement with their client.

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