Interacting with an insurance company is often one of the most difficult engagements one can have. There is the expectation for health, car, home, or life insurance that the service provider during the most difficult periods of one’s life would extend financial coverage. This expectation is formed each time a premium is paid. But, what does one do when there is the non-payment or a delay nonpayment or a delay in payment or an insurance company does not fulfill a promise, especially a payment promise, or do so in a satisfaction unguaranteed fashion. This is an issue many policyholders cross with in wondering whether there is an option of suing the insurance company for the financial and psychological trauma.
This is a question worthy of the time given the recognition of emotional distress being comparable or parallel as the saying goes, to being physically injured. The boundary where hurt feelings begin can in particular cases be crossed because of the unreasonable anxiety, distress, or suffering that is inflicted by the company’s action or inaction. The question of when and how to sue an insurance company, and to what degree of emotional harm for the distress caused by an insurance company and what steps to take first is an issue worth the time and effort.
Emotional Distress: An Overview
The phenomenon known as emotional distress is a type of psychological suffering that is caused by the actions of another person or entity. It may take the form of almost any mental suffering including, but not limited to, anxiety, depression, embarrassment, rage, or psychological trauma, and while not easily quantified, is nevertheless acknowledged by the courts and lawyers that it distress of such a nature has a pronounced effect on a person’s life.
Within the realm of insurance, emotional distress may arise from any of the following:
- Denial of claims which you should rightfully be covered for
- Excessive waiting periods to receive payment for immediate and critical needs
- Harassment or bullying during the claims process
- Being lied to about coverage or the benefit’s of the policy
- Experiencing economic distress as a direct result of the insurers failure to pay
For instance, consider a scenario in which a man has been involved in a car accident. The discomfort from the accident, combined with the paying of medical bills and the subsequent loss of income, is a strained state to be in. However, if the insurance company decides to slow pay the claim or outright deny it, the stress is likely to be overwhelming. Should it be proven that the company was acting in bad faith, that additional psychological stress could very well be the basis for a lawsuit owing to the increased mental stress, as the insurance company is legally obligated to pay the claim.
The requirements of good faith as regards clients and policyholders are paramount to the legal operations of an insurance company and must be adhered to, as policyholders must be treated with honesty, and the company must protect its integrity by discharging its obligations fairly and with promptitude. Now, an example: an insurance company offering to an applicant a cheaper premium than what a policy is worth, which is in the applicant’s best interest, is in fact an unethical practice and a breach of contract which the company might incur.
The following are the more common and generalized causes of breach of good faith of which an insurance company might be accused of:
- Claim denial without sufficient grounds.
- Paying with undue delay, denial of a claim without a proper answer.
- Filing a claim without evidence supporting the claim.
Legal action is often taken in response to recover financial compensation however, in some states, emotional distress caused as a result of the company’s breach of contract can also be claimed.
Suing For Emotional Distress
To prove your claim on emotional distress on your insurance company, you need to prove two elements:
- The actions of the insurance company are negligent, or done in bad faith, and
- The emotional distress you suffered was quantifiable.
The first point is often hard to prove. Emotional damage is much more complex than physical pain and injury, and for this reason, courts take the most extreme of actions in order to prove of the emotional damage suffered. In this, they look at mental issues, medical records, and the testimony of professionals, among others. Still supportive are records in a journal, your family, and the stress and your daily life’s functionality.
In most places, emotional distress is categorized in two:
- Intentional infliction of emotional distress: the actions of the company are extreme, and geared to cause the most damage.
- Negligent infliction of emotional distress: the actions of the company, though irresponsible, do not intend to cause emotional damage.
Both often work in conjunction in a single case against an insurance company.
The Approach Courts Take Towards Emotional Distress Claims
It is important to note that courts do not, as a matter of principle, grant emotional distress claim damages. Extent and success of the claim is determined primarily by the laws and the evidence in the given state. There are differences in regard bytown the acceptance of emotional distress claims; some regions embrace the idea and others restrict the capacity to gain acknowledgement and compensation for such damages.
Factors for a court’s consideration include:
- The Severity
- The Length
- The Evidentiary Support
- The intention behind the defendant’s conduct
If, for example, a life-saving medical procedure is needed and an insurer refuses to pay, the emotional suffering likely to be experienced would be considerable. A much lesser example would be a delay to a process caused by an administrative mistake and the simple addition of a paperwork a person would not be likely to experience emotional distress damages
The Role Of Bad Faith Lawsuits
The majority of the emotional distress claims that insurance companies face are a result of a bad faith lawsuit. A bad faith lawsuit is the case of a person suing the insurer for not fulfilling their legal obligation to act in good faith. If the case is won, the claimant gets to keep:
- the claim amount
- claims for emotional distress
- claims of the insurer’s bad conduct
The last claim is known as punitive damages and is meant to encourage the defendant to be more careful as these claims are meant to also punish the defendant. These claims are awarded to encourage the defendant and punish the insurer for the misconduct. These claims also seek to discourage the defendant from acting in this manner again in the future. These cases can result in an immense amount of settlement for the defendant depending on the amount of misconduct or bad conduct involved.
Steps to Take Prior to Ligation
Before commencing a lawsuit there are certain steps to take:
- Review the insurance policy in detail: Determine what is covered and what is excluded.
- Document Correspondence and Communication: Retain copies of all the correspondence, insurance claim forms, as well as notes taken during telephonic discussions with the insurance company.
- Obtain medical or psychological records: If the case is deemed problematic, consider having a mental health professional document the case and provide accompanying notes.
- Approach a legal practitioner: An attorney concentrating in insurance disputes can appraise your situation and guide you in the legal process.
In certain cases disputes are best resolved through negotiation or mediation, avoiding the court litigation process. In all cases having a lawyer will improve your chances of a favorable outcome.
Potential Results
The following results are possible if you sue your insurance company for emotional distress.
- Compensation Settlement: Insurers would rather settle than go to court. This may allow for a quicker pay out.
- Judges Decision: If your case goes to trial and you emerge victorious, the court will provide you with damages for money lost and emotional distress suffered.
- Dismissed: If no evidence is brought forth to support your case, the court may choose to dismiss your case as the evidence is deemed insufficient.
These outcomes vary depending upon your situation, the laws in your state, and your evidence in relation to your claims.
The Reasons Why Emotional Distress Can Be Considered Damaging
The consequences of emotional distress easily transcend the boundaries of an ailment. It can be the cause of insomnia, disruption of normal social functioning, decreased performance at work, as well as inflicting adverse consequences on one’s health over an extended period of time. Numerous studies highlight an association between stress with cardiovascular diseases, immunosuppression, and psychosocial conditions such as depression.
There is a moral and financial obligation towards society on the part of insurance companies for the abuse liability whereby mental distress is part and parcel of the consequences for the victim as well as the insurer. Allowing emotional distress to be compensable allows insurance companies policyholder relations to be impacted whereby an insurer reputational risk motivates them to treat the policyholders with the care and prudence.
Conclusion
In terms of legal precedents, the insurance policy is designed to relieve the policyholder from stress and worry. If the policyholder has been injured psychologically, there are legal avenues to explore. Policyholders can legally pursue their insurers on the emotionally distress as well as financially distress. If a policyholder is suffers from legal abuse of their policy, there is a pathway to pursue them energetically and legally.
The stress and worry inflicted by the insurer is legally actionable and there are legal consequences for causing mental distress. It is morally wrong for an insurer to cause mental discomfort, and action can be taken to relieve the distress the policyholder suffers from.
-
If you are exploring other insurance-related concerns, you may also want to know does insurance cover hair transplant and what situations qualify for coverage.
-
Many people also ask how much is a tummy tuck with insurance, since elective procedures often have different coverage rules.
FAQs About Sue My Insurance Company For Emotional Distress
Can I sue my insurance company for emotional distress without a lawyer?
Although possible, it is highly advisable to engage a practicing attorney for insurance matters. Such cases are involved and, more often than not, need legal help to win.
What is the documents needed to support emotional distress claims?
Emotional distress claims are supported by personal journals, the testimony of bystanders, and mental health documents.
Do all states permit suing an insurance company for emotional distress?
Not all the states are the same. Certain states are more conservative and have more hoops to jump through for emotional distress claims.
What is the settlement for emotional distress?
There is no single answer as to how much. Different states have varying laws, and legal proof along with the extent of damages all play a role. Some claims have barely any, while in others, litigants walk away with a substantial amount.
What action should I take if my insurance company denies a claim with no supporting reason?
You need to analyze your policy, retain all denial correspondence, and seek the help of an attorney with concrete insurance experience. If it is determined that the claim was made in bad faith, there are litigation avenues.
