Insurance Bad Faith Liability For Delayed Payments
An often overlooked aspect of Iowa's insurance bad faith law is insurance companies' liability for delayed payment of claims. Insurers can't act unreasonably in delaying payments on personal injury or wrongful death, truck accident, drunk driving, motorcycle accident, car accident, products liability, private nuisance, dog bite, or premises liability claims. An insurer must have a reasonable basis for any delay in a claims payment.
In general, Iowa's law concerning insurance bad faith mandates that insurers pay or deny an insurance claim within a reasonable time period. The insured should receive prompt responses and answers to questions or concerns about the insurance claim. Iowa law prohibits insurance companies from unnecessarily delaying the consideration of an insurance claim or requesting unreasonable documentation or information as a delay tactic.
Insurers can be found liable for insurance bad faith even after an insured’s claim has been fully paid. In those situations, the insured will frequently argue that the insurance company improperly delayed or prolonged its claims investigation or unreasonably withheld the claims payment. This category of insurance bad faith claim can also be asserted when an insurance company withholds payment for undisputed damages for no apparent reason.
An insurance bad faith case in which the plaintiff alleges that the insurer unreasonably delayed making a claims decision or a payment focuses on the reason for the insurer's delay. Courts carefully analyze the insurer’s attitude towards the claim and the manner in which the claim was investigated. Among the factors that courts consider in evaluating the reasonableness of a delayed claims decision or payment are:
Any documentation from the insurer that summarizes the investigation's process and explains the reasons for any delays.
Whether the insurer's investigation was reasonable, in good faith, and prompt.
Whether any reasons used to explain a lengthy claims investigation were relevant and important to the circumstances encompassed by the insurance claim.
Whether the insurance company maintained good communication with the insured during the claims process.
We have represented many people in cases in which they allege that their insurance company improperly delayed payment of an insurance claim. Please feel free to contact us if you believe that you've been in a similar situation and would like to see if we can help out.