Insurance companies are often hit with bad-faith claims for a variety of reasons -- some far less valid than others.
When a plaintiff is alleging that a claim was unfairly denied, delayed or underpaid, you can take several different approaches to resolve the issue. In some cases, mediation or negotiation is appropriate. However, when a claimant is clearly exaggerating, presents conflicting information or simply doesn't want to negotiate in any reasonable manner, you may have to change strategies. It may pay to go on the offensive.
According to Insurance Journal, many insurers caught up in unfounded and exaggerated bad-faith claims find themselves dealing with "seemingly endless written discovery requests" from the plaintiff. Make no mistake: This is a plan on the part of the plaintiff to wear down the insurer and force a settlement.
Experts recommend that insurers take the approach that "two can play that game." An insurer's own written discovery requests can become an aggressive tool that turns the table on a plaintiff. By going on the offensive early in the process, the insurance company can often catch the plaintiff in contradictory statements. The more exaggerated or unfounded the allegations, the more likely it is that the plaintiff's responses to written discovery requests are going to show a lack of supporting documentation and a shaky foundation for any valid claim.
In fact, discovery can often dig out an entirely different picture of the facts than what the plaintiff is presenting -- and save the insurer from making an unnecessary settlement.
Insurance companies spend a lot of energy dealing with bad-faith claims by plaintiffs who feel aggrieved for reasons that don't always make sense. Unfortunately, those are the plaintiffs that are usually least open to negotiation. If your company is facing this kind of problem, find out more about how a solid legal defense can help.