What Happens When an Insurance Company Acts in Bad Faith and Refuses to Settle a Case?

Motorists in Virginia are required to carry a certain amount of auto insurance in order to legally operate a vehicle on any public road. In theory, this prevents an uninsured motorist from causing an accident that results in medical bills that he or she cannot pay. However, insurance companies are for-profit enterprises that may not always have the accident victim’s best interests in mind. As a result, Virginia law allows an accident victim to pursue a bad-faith claim against an insurance company that refuses to settle a claim without a good reason.

Parking LotVirginia Bad-Faith Claims

In Virginia, the applicable statute that governs bad-faith insurance claims is Va. Code § 8.01-66.1. The statute explains that an insurance company that fails to settle a claim out of bad faith can be ordered by a court to pay the accident victim any amount due, plus interest, as well as a reasonable fee for attorney’s fees and other expenses. In some cases, an insurance company that refuses to settle in bad faith may become liable for amounts above and beyond those outlined in the insurance policy. Importantly, the burden is on the accident victim to prove that the insurance company acted in bad faith.

A Recent Example of Alleged Bad Faith

In the case, Holloway v. Direct General Insurance Company, the plaintiff was injured in a low-speed auto accident occurring in a parking lot. The facts leading up to the accident were in dispute. Holloway, the plaintiff, claimed that the accident was Sykes’ fault, and Sykes, who was insured by the defendant insurance company, claimed that the accident was Holloway’s fault.

Holloway entered into settlement negotiations with Sykes’ insurance company. A settlement was reached regarding the property damage claim, but an agreement couldn’t be reached regarding the personal injury claim. The insurance company claimed that Holloway’s injuries were the result of a pre-existing condition, rather than being caused by the accident.

Holloway sued Sykes’ insurance company and claimed that it acted in bad faith when it failed to settle the case within the policy limits. However, the court hearing the case determined that the insurance company did not act in bad faith when it refused to settle the case because there were legitimate issues with Holloway’s claims. As a result, the court held that the insurance company did not act in bad faith, and Holloway’s appeal was dismissed.

Have You Been Dealing with a Difficult Insurance Company?

If you or a loved one has recently been involved in any kind of Virginia car accident and are having difficulties dealing with insurance companies, you should consider contacting a personal injury attorney for assistance. Many times, insurance companies refuse to settle a claim filed by an unrepresented accident victim until a skilled attorney gets involved. Do not let the insurance companies push you around. Call 703-491-7070 to set up a free consultation with an experienced accident attorney who will fight for your rights. Calling is free and will not result in any obligation on your part unless we can help you obtain the compensation you deserve.

See More Blog Posts:

Good Samaritan Laws and How They Can Affect a Personal Injury Lawsuit, Virginia Injury Lawyers Blog, September 20, 2016.

Battery Claims Based on Lack of Informed Consent May Be Subject to Procedural Requirements of Medical Malpractice Claims, Virginia Injury Lawyers Blog, September 6, 2016.