In our litigious society, lawsuits against insurance providers have grown increasingly common. And because Maryland Code Ann., Cts. & Jud. Proc. § 3-1701, allows enhanced damages in claims alleging bad faith, settlements and verdicts can ravage an insurance provider’s finances. The more information that insurers, businesses entities and their counsel have about insurance torts and allegations of bad faith, the better equipped they will be to handle potential actions.
- The Maryland Insurance Administration (MIA) handles administrative bad faith claims
Typically, insureds must pursue every administrative option for recourse before filing an action. The Maryland Insurance Administration oversees administrative remedies for lack of good faith claims. Cases that the MIA cannot resolve or cases that are exceptions to Md. Code Ann., Ins. § 27-1001 may have to proceed to court.
- Civil rulings set long-lasting precedent
Sometimes, insurance companies spend more money investigating and defending a claim than they would simply paying a settlement. Why put so much time, money and effort into investigation and defense? Because the court’s ruling on a case can set a precedent that may have a negative impact on insurers for years to come.
- Defense counsel is crucial
With that said, one of the best ways that insurers, self-insured, employers, businesses and other entities can avoid and resolve bad faith claims is by working with insurance defense counsel. Navigating the numerous regulations of insurance law requires knowledgeable legal advice. Though defense may require the allocation of significant resources, it is well worth it to avoid unfavorable settlements or judgments.
Because torts play an incredibly significant role in today’s world. Every insurer must remain aware of the potential for a tort, even involving seemingly airtight insurance policies. This will go a long way toward protecting their bottom line if a bad faith claim does arise.