It can seem like disability insurance claims drag on forever. Sometimes delays are justified and inevitable—it can take time to collect and evaluate all of your medical records and other evidence. However, not all delays are so innocent. Occasionally, insurance companies hold off on approving undeniably valid claims for disability insurance benefits, hoping that you’ll give up, make a mistake, or accept an unreasonably low settlement.
When this happens, you have legal options. In Illinois, as in most other jurisdictions, disabled policyholders can sue their insurance company when it delays decisions about coverage, eligibility for benefits, or other issues in bad faith. In this article, we’ll help you identify possible insurance company bad faith.
What Does “Bad Faith” Mean in a Disability Insurance Claim?
In an insurance claim, there is an uneven balance of power. The insurance company has more information, financial resources, and the ability to approve or deny your disability claim. To prevent abuse of this power, Illinois law requires that they handle your claims in good faith. Otherwise, the insurer may owe you damages. This duty of good faith applies not just to the determination of whether to pay your benefits, but also to the speed of its claim handling.
Delays in the handling of a legitimate disability insurance claim can put a great deal of financial pressure on the policyholder. As you attempt to recover from your disability or adapt to new and unexpected limitations, you may not have consistent income and may feel financially vulnerable. The emotional and financial pressures can mount quickly. If the insurance company uses this vulnerability to take advantage of you—slowing down your claim, refusing to answer your phone calls, or providing you with false information, it may be liable for its misconduct.
If the insurance company uses this vulnerability to take advantage of you—slowing down your claim, refusing to answer your phone calls, or providing you with false information, it may be liable for its misconduct.
What Happens During a Disability Insurance Claim Investigation?
Once you submit a disability insurance claim, the company will assign your case to an insurance adjuster. This individual is responsible for evaluating your case and issuing a decision to either approve or deny your benefits. This investigation can take time, since the adjuster will likely:
- Review your application and other forms that you complete
- Request medical records and statements from your doctors and medical providers
- Ask to meet with you and perform a field interview
- Schedule an independent medical examination
- Assess your work experience and ability to work
- Consult with experts, including vocational specialists and physicians
If you have an employer-sponsored disability plan, this process typically cannot take more than 150 days. However, if you have a self-funded disability insurance policy, the insurance company doesn’t have a specific deadline. Instead, it cannot wait an unreasonable amount of time before it makes a decision.
RELATED: How Long Does It Take UNUM to Process a Claim? It Depends
When Is an Insurer’s Delay Considered Bad Faith?
Let’s explore Section 155, the Illinois law that governs bad faith claims. Under state law, insurance companies can act in bad faith in many ways, including:
- Failing to communicate promptly or regularly with you
- Refusing to pay an acknowledged claim amount that owes you
- Deliberately undervaluing a claim and pressuring you to settle
- Issuing a decision without an adequate investigation of your claim
However, a bad faith claim may also arise when the insurer’s delay is “vexatious and unreasonable.” Determining whether a delay is reasonable or unreasonable is not particularly straightforward. The court must consider the total circumstances, including factors like the adjuster’s attitude towards you, the length of time you have to wait, and whether you had to pursue litigation to get the benefits you deserve.
For example, suppose you are a short-term disability insurance policyholder. You suffer serious back injuries in a car accident and cannot work for six months. You file a claim for disability benefits with your insurance company. While it’s clear that the company owes you benefits, the insurance adjuster decides to delay payment for three months, reducing your benefits. The adjuster hopes that you’ll think it’s too much of a bother to file a lawsuit and get full compensation.
In this case, a court is likely to find that you can sue and recover damages under Section 155 due to a vexatious and unreasonable delay.
RELATED: Will Illinois’ Courts Enforce a One-Sided Insurance Contract?
Bryant Legal Group: Experienced Chicago Bad-Faith Insurance Lawyers
If you have had your legitimate disability benefits claim unreasonably delayed (in processing or payment) by the insurer, you may have the right to sue and recover damages under Illinois’ bad faith insurance law. Successfully litigating bad faith disability insurance claims can be quite challenging. They demand an experienced team of attorneys who can fully investigate and prosecute your claims. At Bryant Legal Group, our bad faith insurance attorneys have decades of experience representing disabled claimants. We provide top-notch advocacy at every phase of litigation, from negotiating with the insurance company to trial and appeals.
To schedule an initial consultation, call us at 312-561-3010 or complete our online form.