You paid your premiums for years. Now your insurer answers your claim with months of silence, a denial letter, or an offer far below your contractor’s estimate. A bad faith insurance lawyer can tell you whether that conduct crosses a legal line and what it could cost the carrier.
The tarp is still on the roof. Hotel bills keep coming, or your business stays closed while the building sits damaged. Every week the carrier stalls, repairs get more expensive and the stress gets harder to carry.
At Denham Property & Injury Law Firm, we represent policyholders in exactly this position. Denied, delayed, and underpaid claims are the core of our practice. We know the reasons carriers give for paying less, and we know which of those reasons the law allows.
Call (859) 900-BART (2278)or contact us online for a free consultation. We will read your policy and your insurer’s letters and tell you plainly whether its position holds up.
What Counts as Bad Faith by an Insurance Company?
An insurance company acts in bad faith when it denies, delays, or underpays a claim without a reasonable basis for doing so. Many states also require proof that the insurer knew it had no reasonable basis or acted with reckless disregard.
Most states have adopted a version of the National Association of Insurance Commissioners’ model Unfair Claims Settlement Practices Act, which spells out the claim-handling conduct regulators treat as improper.
A wrong decision is not automatically bad faith, and an honest coverage dispute usually isn’t. These patterns are where a disagreement starts to look like something more.
Unreasonable Delay
Your insurer has a duty to acknowledge, investigate, and decide your claim within a reasonable time, and many states set specific deadlines.
A carrier that requests the same documents twice, keeps reassigning your file, or goes quiet after you submit a proof of loss is building a record of delay. That record can become evidence.
Denial Without a Real Investigation
Most state unfair claims laws list refusing to pay without a reasonable investigation as an unfair practice. A denial issued before anyone inspects the damage suggests the carrier chose the outcome first. So does a denial based on a quick desk review of a few photos.
Lowball Offers the Loss Doesn’t Support
A low offer alone does not prove bad faith. The problem arises when the number has no support in the insurer’s own inspection or skips line items your contractor documented.
The Model Act treats lowballing a policyholder into a lawsuit as an unfair claims practice when the offer is substantially less than what the policyholder ultimately recovers.
Misrepresenting What Your Policy Says
Adjusters sometimes cite an exclusion that doesn’t fit the loss, misstate a coverage limit, or tell you a type of damage isn’t covered when the policy says otherwise.
Misrepresenting pertinent facts or policy provisions tops the list of unfair practices in both the model act and Kentucky’s Unfair Claims Settlement Practices Act. The policy language controls, not the adjuster’s summary of it.
No Clear Explanation for the Denial
When an insurer denies a claim or offers a compromise, the Model Act and most state versions call for a reasonable explanation tied to the policy and the facts.
A one-line letter that cites “policy exclusions” without naming them falls short of that standard. So do shifting explanations, where each new reason replaces one that stopped holding up.
Ignoring Your Evidence
You sent the roofer’s report, the engineer’s findings, and a room-by-room inventory. The adjuster’s decision mentions none of it. A reasonable investigation rests on all available information, including evidence that cuts against the carrier’s view.
What’s the Difference Between First-Party and Third-Party Bad Faith?
First-party bad faith is a claim against your own insurance company for how it handled your own claim. That is the bad faith work we do for homeowners and business owners whose property carriers mishandled fire, water, storm, wind, hail, or tree damage claims.
Third-party bad faith usually involves liability coverage. Someone sues the policyholder, and the insurer unreasonably refuses to settle within the policy limits, which exposes its own customer to a judgment above the coverage. Here is how the two compare.
| First-party bad faith | Third-party bad faith | |
|---|---|---|
| Whose claim is it? | Yours, under your own policy | Someone else’s claim against you |
| Typical policies | Homeowners and commercial property | Auto liability and general liability |
| What bad faith looks like | Denying, delaying, or underpaying your loss | Refusing a reasonable settlement within policy limits |
| Who can sue the insurer | You, as the policyholder | The policyholder, and in some states the injured claimant |
What Can You Recover in a Bad Faith Claim?
A successful bad faith claim can reach beyond the benefits your policy promised. Depending on your state and the type of claim, damages can include:
- The unpaid benefit: the amount the insurer should have paid for your covered loss in the first place.
- Consequential damages: financial harm the denial or delay caused, such as higher repair costs as damage spread or business income lost while repairs waited.
- Interest and statutory penalties: some states add interest or a penalty when an insurer pays late without a good reason.
- Attorney fees: available where a statute or state case law allows them.
- Punitive damages: allowed in some states for conduct a court or jury finds malicious, fraudulent, or reckless, often only with clear and convincing evidence.
No attorney can promise a result. Our job is to identify every category your state allows and build proof for each one.
Does Bad Faith Law Work the Same in Every State?
No. Some states treat bad faith as a tort, and others rely on a statutory claim or penalty. Here is how the rules compare in the four states where Denham Property & Injury Law Firm has offices.
| State | Where the claim comes from | A rule worth knowing |
|---|---|---|
| Kentucky | Common-law bad faith and Kentucky’s Unfair Claims Settlement Practices Act, both judged by the three-part test in Wittmer v. Jones | Under KRS 304.12-235, if the insurer makes no good-faith attempt to settle within 30 days after it receives notice and proof of the claim, the final settlement carries 12% annual interest from the end of that 30-day period. Attorney fees are available if the delay had no reasonable foundation. |
| Indiana | A tort claim the Indiana Supreme Court recognized in Erie Insurance Co. v. Hickman in 1993 | Punitive damages require clear and convincing evidence, and Indiana law caps them at three times compensatory damages or $50,000, whichever is greater. |
| Tennessee | A statutory penalty under Tennessee Code Section 56-7-105 | If an insurer refuses to pay within 60 days after your demand and the refusal was not in good faith, it can owe a penalty of up to 25% of the loss, measured by the added expense, loss, or injury, including attorney fees, that the refusal caused. |
| Montana | A statutory claim under Montana Code Section 33-18-242 for specific unfair claim practices. Montana insureds can sue under this statute, for breach of contract, or for fraud, but not for common-law bad faith. | You have two years from the date of the violation to file a statutory claim, and the insurer has a defense if it had a reasonable basis in law or fact to contest the claim. |
Other deadlines and procedural rules also apply, so we review the law governing your policy before recommending a path.
Proving Bad Faith: The Claim File
The strongest evidence in most bad faith cases comes from the insurer’s own records. Every carrier keeps a claim file. In a lawsuit, your attorney can request it through discovery, the court process each side uses to get the other’s documents and testimony.
That file can include:
- Claim notes and activity logs: time-stamped entries showing who worked on your claim, what they reviewed, and when.
- Adjuster reports and internal emails: recommendations, supervisor approvals, and the reasons behind each decision.
- Reserve entries: the amount the insurer set aside as its own estimate of what your claim would cost.
- Outside reports: engineering, cause-and-origin, and estimating reports the carrier commissioned.
When a claim note shows the adjuster confirmed storm damage but the denial letter blames wear and tear, the carrier has a problem. A reserve set well above the offer you received may raise similar questions.
Access has limits. Insurers often claim privilege over parts of the file. Courts also disagree about how much reserve information must be produced, and some decide coverage before allowing bad faith discovery.
A public adjuster can help document and negotiate a claim but cannot file a lawsuit on your behalf, represent you in court, or use discovery to obtain the file.
When the question is why your insurer acted the way it did, the answer is usually in documents only litigation can reach.
How Does a Bad Faith Insurance Claim Work?
Working with Denham Property & Injury Law Firm on a bad faith claim usually follows these steps:
- You talk with an insurance bad faith attorney. Your free consultation starts with your policy, the insurer’s letters, and your timeline of calls and emails.
- We rebuild the claim history. Our team compares the carrier’s estimates, inspections, and explanations against your policy and evidence to find the decisions it cannot support.
- We send a formal demand. The demand sets out what the policy requires and what the insurer owes. In some states, it also starts a clock, such as Tennessee’s 60-day window.
- We file suit if the carrier won’t pay. A lawsuit can pair the claim for policy benefits with the bad faith claim, and it opens the claim file to discovery.
Why Hire Denham Property & Injury Law Firm for a Bad Faith Claim?
Denham Property & Injury Law Firm represents policyholders against insurance carriers. Here is what you can expect when you bring us your claim:
- Homeowner and business representation: We handle bad faith claims under both homeowners and commercial property policies.
- Bart leads the cases: J. Bart Denham, Esq., leads our policyholder-side practice and the bad faith cases we take on.
- What clients notice: Former clients point to Bart’s responsiveness, his technical knowledge of insurance disputes, and his negotiation skills.
- Offices in four states: We represent policyholders from offices in Lexington, Kentucky; Carmel, Indiana; Nashville, Tennessee; and Bozeman, Montana.
- Contingency fee basis: You pay no attorney fees unless we recover compensation for you.
- Free consultations: Your first conversation with our team costs you nothing.
“I battled with insurance for nearly a year before engaging Bart, and he was able to receive a settlement in a short amount of time.”, John T.
Frequently Asked Questions About Insurance Bad Faith
Is insurance bad faith the same as breach of contract?
No, a breach of contract claim asks whether your insurer failed to pay what the policy promised. Bad faith focuses on how the insurer handled your claim and whether it lacked a reasonable basis for its decision. Many policyholders bring both claims together, and a bad faith claim can open damages a contract claim cannot.
What does an unfair claims settlement practices law do?
An unfair claims settlement practices law lists claim-handling conduct a state treats as improper, such as misrepresenting policy terms or refusing to pay without a reasonable investigation. Most states based theirs on a model act from the National Association of Insurance Commissioners. Whether a policyholder can sue directly under the law depends on the state.
How long do I have to file a bad faith claim against my insurance company?
The deadline for an insurance bad faith claim depends on your state and the type of claim. Montana, for example, gives insureds two years from the date of the violation to bring a statutory claim.
Your policy may also set its own deadline to sue over the underlying loss, which can be shorter than the state’s general limit, and state law decides whether that clause is enforceable. Our team identifies both dates at the start of your case.
Can I sue my insurance company for bad faith after accepting a settlement?
It depends on what came with the payment. A signed release can end the claims it covers, and in most states, cashing a check that clearly says it is “payment in full” of a disputed claim can have a similar effect. Payment of only the undisputed part of your claim generally does not waive your right to challenge the rest.
Should I file a complaint with my state insurance department?
A complaint can prompt a state insurance department to review how a carrier handled your claim, but the department cannot award you damages the way a court can. You can pursue a regulatory complaint and a bad faith claim at the same time. The National Association of Insurance Commissioners keeps a directory of state insurance departments.
Can I sue my insurance company for emotional distress?
In some states, yes. States that treat insurance bad faith as a tort may allow damages for emotional distress the insurer’s conduct caused, sometimes only alongside financial losses.
Where state law limits policyholders to a contract claim or a statutory penalty, those damages may not be available.
Make Your Insurer Answer for How It Handled Your Claim
If your insurance company is acting in bad faith, we will trace where its explanation departs from your policy and your evidence. Denham Property & Injury Law Firm represents homeowners and businesses from offices in Lexington, Kentucky; Carmel, Indiana; Nashville, Tennessee; and Bozeman, Montana.
Call (859) 900-BART (2278), or (615) 813-6857 for our Nashville office, or contact us online to schedule a free consultation.