Bad Faith Insurance: Looking Out for Number One - And it isn't You

Beaumont, TXFreddie and Zohreh Shahrodi know all about what their insurance policy SAYS. It's what their insurer didn't deliver that has the Jefferson County couple up in arms, and battling in court—yet another lawsuit against bad faith insurance.

According to an article in the Southeast Texas Record the couple's insurer, Fire Insurance Exchange denied the couple their full claim from damages caused in the wake of Hurricane Rita. The lawsuit, filed with the Jefferson County District Court on May 30th of this year, alleges that the insurer denied a portion of the claim without conducting an adequate investigation. Nor did they explain the reasons for the reduced settlement.

It used to be, according to popular belief, that ne'r-do-wells with neither the cash nor the common sense, would drive their vehicles without insurance. The reason? The fines for a first offence were less expensive than the premium.

Thankfully, penalties for driving without insurance have been beefed up, and most law-abiding individuals would not dare step into a car, let alone drive one, without being adequately protected. After all, it's the law, and it's the right thing to do.

Lord knows it's costing you enough. A high premium, coupled with a hefty deductible, means that you're only making a claim if your car - or your home, for that matter - is severely damaged. To do otherwise would be unthinkable, as it would put a claim on your record, and your rate would go up.

So pay your premiums, we are told. Keep a good driving record, they say. And for small claims, y'know it just might be better to fund it yourself than trigger the policy, even if the claim is above the deductible, in order to protect your good rate. Thanks for your excellent payment record. Have a nice day.

Oh, and by the way - make sure you're aware of the terms and conditions. Know what is covered, and what is not.

And so we do - we pay our premiums, we view our deductible like the good chair that's only reserved for company, we read our policies, and we drive responsibly. We keep our roofs repaired and our homes fire-safe, and we go on like this for years. Some pay, and pay and pay and never make a claim. The price of good luck.

But god forbid if, and when you do...well, all that money you paid out was worth it. You're finally going to get a return on that investment.

Ya think?

Getting back to the Sharodi lawsuit:

The action involves five counts, and faults the insurer for breach of contract (which a policy, most assuredly IS), violation of the Texas insurance code on two counts, breach of good faith and fair play, knowledge and intent, and deceptive trade practises.

The Shahrodi's legal team is hoping the trial will be heard by a jury, something that State Senator Stewart Greenleaf, over in Pennsylvania, is hoping for more of.

Under Pennsylvania State law, only judges have the authority to hear bad faith insurance cases. Greenleaf's Senate Bill 745 was tabled to protect residents' right to a jury trial, and is intended not to guarantee a jury trial per se, but rather to guarantees a litigant's right to ask for one. Greenleaf adds that federal court already allows jury trials in these types of cases, according to the Bucks County Courier Times. The change would align the state and federal guidelines.

Those who oppose bad faith trials by jury, including the Pennsylvania Association of Mutual Insurance Companies, are suggesting that juries might be inadequate in understanding and assessing the more technical aspects of an insurance lawsuit.

Proponents, however suggest that opposition to jury trials is based on a fear of large awards, at a level seen in malpractice suits. More correctly, say the Pennsylvania Trial Lawyers Association - which supports the Bill - there is no reason to believe that juries who routinely wade confidently through evidence, and table verdicts in sometimes complex negligence and criminal cases, would not be equally competent dealing with bad faith trials.

Senator Greenleaf's Bill is currently before the Senate Judiciary Committee. Meantime, the trend continues in the insurance industry to dig in their heels when asked to pay out a claim, even for long-term clients who have paid their premiums diligently. Not all insurance companies stoop to fraud and misrepresentation, and most - even with the infrequency of contact - are a pleasure to do business with. A contract is a contract after all, and any breach of contract by either party is grounds for litigation. Even so, it's no secret that the industry is making it just a bit tougher for you to collect.

As an aside, later this month filmmaker Michael Moore turns his lens on the health care and health insurance industries with his movie 'Sicko'

Perhaps, one day, he might consider doing the same for insurance.