If your insurer unreasonably delays your insurance claim, you may have grounds to file a bad faith lawsuit. In Illinois, insurance companies have specific guidelines on how long they have to make determinations on claims and to provide payments to the insureds. While this deadline can be extended, sometimes insurers act in bad faith by putting off handling claims without cause. In such cases, you may be able to sue the insurance company for taking too long.
Table of Contents
How Long Does an Insurance Company Have to Approve or Deny a Claim?
If you suffered injuries or other significant losses in a covered event, you probably have immediate expenses that should be addressed. The sooner you file your claim and receive a settlement from your insurer, the sooner you can get your life back on track. Unfortunately, the insurance company is not going to be as eager to see you return to your previous financial condition. In fact, insurance companies have a history of sitting on claims and not responding. To help prevent unfair claims practices like this, Illinois heavily regulates the insurance industry. State law sets a time limit for insurers to respond to claims.
In Illinois, insurance companies typically have 15 days in which to respond to a claim and give instructions. Then have a 30-day period to pay the full amount once it has been approved. Unfortunately, there is no time limit in Illinois to approve the claim, and insurers often extend their own deadlines to allow time for investigations. This is especially true when liability for a loss is not clear. If the insurance company extends their deadline to respond to your claim, they are required to send you a notice letting you know why. Most of the time, insurers send these notices by mail. If further delays are necessary, the insurer must send you a notification and explanation.
While there are legitimate reasons for an insurance company to delay processing a claim, some insurers take advantage of the timeline leniency. They delay processing or payment long enough that the statute of limitations for you to take legal action expires, and they do so without a valid reason.
If your insurance company is taking too long to respond or pay out on your claim, you have the right to sue. In some cases, simply hiring an experienced attorney to remind the company of its obligations under state law is enough to get your insurer to take your claim seriously. Other times, however, your lawyer will need to bring a lawsuit to move things along.
Understanding the insurance claim process can help you identify whether your insurer is taking too long.
Gathering Evidence
After a covered event, you will need to begin gathering information to file your insurance claim relatively quickly. How long you have to file your claim depends on a number of factors, but the type of claim you are filing and the terms of your policy will play the most significant role.
You should gather as much evidence as possible shortly after the incident occurs. Doing so will help ensure you have evidence to support your claim, should the insurance company dispute anything. If possible, try to gather the name, addresses, and phone numbers of people who may have witnessed the event. Photos and videos are helpful as well. Also get detailed notes regarding the events leading up to the incident. If you suffered serious injuries and needed medical attention because of an accident, you should keep copies of doctor’s reports and any medical bills you receive.
Initiating the Claim
Before initiating a claim, you will need to determine whose insurance company you are going to need to file the claim with to get compensation. For example, if the incident that caused your injuries was a motor vehicle accident and another party was liable, you will file your claim against his or her liability insurance. In this case, that insurance company does not owe any duty to you to make sure the claim is processed in a timely manner. Their duty is owed to the insured person. If the at-fault party was uninsured or underinsured, however, you will typically file with your own insurance company, who does owe a duty to you to process your claim, acting in good faith and fair dealing.
Once you have gathered all relevant information and evidence, you should contact the insurance company. Many companies allow you to file a claim online, or you can call the insurance company to begin the process. The company will likely send you claims forms to fill out and return.
Once you have filed your claim, the insurance company will assign an adjuster, and begin investigating your claim. State law in Illinois requires insurance companies to acknowledge the receipt of your claim and begin investigating within 15 days.
The insurance company may send you a proof of loss request within this timeframe, which may be a request for reports, receipts, or statements relating to the claim.
Investigating the Claim
After sending and receiving back completed all the necessary forms, insurance companies investigate your claim and decide whether to approve or deny it.
The purpose of the investigation is to determine the legitimacy of the claim, as well as the amount of damages that you are claiming. While the investigation will be slightly different depending on what type of insurance claim you are making, there are several steps that each investigation will likely take:
- Collect and review documents
- Locating and interviewing witnesses
- Taking statements
- Inspecting and photographing the site or damaged property, and view any surveillance footage
- Reviewing bills, receipts, and invoices
- Obtaining medical authorizations
If you have a simple and straightforward claim, the process should not take very long. If you have suffered significant injuries, or losses, the investigation will likely take longer.
There may also be a problem with your claim, such as identifying who is liable for your losses, which makes the process more complicated. So, the more you are claiming, or the more complicated the incident, the more thorough the investigation is likely to be, and the longer it is likely to take.
Accept or Deny the Claim
Once the insurance company has completed the investigation, it will deny or accept your claim.
If your claim is not denied, then the company will offer you an amount of money as a settlement offer for your claim. You can accept this offer, negotiate for a higher amount, or reject it outright. In most cases, the insurance company’s first settlement offer is going to be substantially less than what the claim is worth. You do not have to accept the offer from the insurer. In fact, you should discuss the case with your attorney before agreeing to anything.
Once a settlement amount has been agreed on, the insurance company has 30 days within which to pay you. If your insurer does not issue payment within 30 days of the agreement, you can take legal action.
If your insurance company denies your claim unfairly, or you and the insurer are unable to reach a consensus on a settlement offer, then you can bring a lawsuit against the company.
Why Do Claims Investigations Take So Long?
One of the issues that can take time to investigate is determining fault. For example, if you suffer losses on your own property because of an electrical fire, liability may lie with your insurance company under your homeowner’s insurance policy, or it may lie with an electrician, or even a product manufacturer.
The insurance company might also need to calculate a settlement offer. The company may also require estimates to repair your property damage. It is not unusual for these investigations to take more than 30 days.
Why Do Insurers Delay Investigations?
Unfortunately, sometimes insurers intentionally delay investigations. There are several reasons why, and some of these reasons include:
It Puts Pressure on You to Settle
After an incident happens that should be covered by your insurance, you may have medical bills to pay or repairs to make. Dealing with these undue costs is made even worse if you are not able to work because of your injuries, you’re unable to live in your home because of the damage, or you cannot run your business because of damage to equipment or property. While the companies are able to extend the time period for investigations, you may be put under pressure to pay bills. If an insurance company waits, you are more likely to take the first settlement offer rather than take time to push for a higher settlement, due to financial distress.
You Might Give Up
At some point, if the company is difficult to deal with and a settlement offer is not forthcoming, many people might decide that there is no prospect of getting a settlement and simply give up. Walking away saves the insurance company from having to pay out a claim.
Your Case Might Go Past the Statute of Limitations
In Illinois, once the statute of limitations has passed to take legal action, you are typically prohibited from suing the insurance company. If the insurance company delays long enough, then this period might pass, and you will have no recourse if the insurer denies a legitimate claim.
Can I Sue the Insurance Company for Taking Too Long?
Insurance companies in Illinois have a duty to their policyholders to act in good faith and fair dealing. Sometimes, insurance companies employ delay tactics to avoid their contractual obligations to their clients. They do this by refusing to pay a legitimate claim or failing to investigate and process a claim within a reasonable period. These attempts to go back on their obligations are known as bad faith insurance. If the insurance company has taken too long to process or pay out on your claim, you have the ability to file a bad faith insurance claim.
Illinois prohibits bad faith insurance practices. If an insurance company has committed acts of bad faith, you may be able to bring a lawsuit against the insurer, but this is not something you should do on your own. The insurance company will have an experienced team of attorneys on their side, working to protect the company’s bottom line. For your lawsuit to be successful, you will need to hire the best bad faith insurance lawyer in your area to level the playing field between you and the insurer.
