58 steps across 12 sections

1. Review Your Policy

Read the full policy (not just the declarations page) to confirm your claim is covered
Identify the specific provisions the insurer is violating
Get the dated version of your policy that was in effect at the time of loss

2. Document Everything

Save ALL correspondence (letters, emails, phone call notes with dates/times/names)
Keep a timeline of events: when you filed, when they responded, what they said
Get your claim file from the insurer (you have a right to request it in most states)
Save medical records, repair estimates, receipts, and any evidence supporting your claim value
Document financial harm caused by the delay or denial (late fees, debt, emotional distress)

Bad faith insurance attorneys typically work on contingency (no upfront cost; they take 33-40% of recovery)
An attorney can evaluate whether you have a viable bad faith claim
They can pursue both the original claim benefits AND bad faith damages
Statute of limitations for bad faith claims varies by state (typically 1-6 years)

If the insurer does not resolve the claim after demand letter and DOI complaint
Your attorney files a bad faith lawsuit in state or federal court
Discovery process may reveal internal insurer documents showing bad faith intent
Many bad faith cases settle before trial once the insurer faces litigation costs and exposure

Unreasonable denial Denying a clearly valid claim without a legitimate reason
Failure to investigate Not properly looking into a claim before denying it
Unreasonable delay Taking excessively long to process or pay a claim without justification
Lowball offers Offering significantly less than the claim is worth to pressure a quick settlement
Ignoring evidence Disregarding documentation that supports the claim

Failure to communicate Not responding to the policyholder's calls, letters, or inquiries
Misrepresenting policy terms Telling the policyholder something isn't covered when it is
Not explaining denial reasons Denying a claim without providing a clear written explanation
Threatening or intimidating Using aggressive tactics to discourage the policyholder from pursuing the claim

Unreasonable interpretation of policy language Twisting ambiguous terms against the policyholder (courts typically interpret ambiguities in favor of the policyholder)
Requiring excessive documentation Demanding unnecessary paperwork to delay or discourage the claim
Changing the reason for denial Shifting justifications after the policyholder addresses the initial reason
Not following internal procedures Deviating from the company's own claims handling guidelines

Homeowner's insurer refuses to pay for tornado damage that is clearly covered by the policy
Auto insurer denies a valid accident claim without giving any reason
Insurer offers $1,000 for $15,000 in documented medical bills after an accident
Health insurer denies pre-authorized surgery after the surgery has already been performed
Insurer takes 6+ months to process a straightforward claim

You file a claim on your own policy and the insurer acts in bad faith
Available in most states, but remedies vary significantly
Some states allow direct lawsuit against the insurer; others require administrative complaint first
Your liability insurer fails to settle a claim against you within policy limits, exposing you to excess judgment
Example: Someone sues you for $500,000; your insurer with $250,000 limits refuses a $200,000 settlement offer; jury awards $500,000; insurer may be liable for the excess

California Strong consumer protections; statutory and common law bad faith; punitive damages available
Florida Statutory bad faith; insurer has 60 days to investigate and pay; failure triggers bad faith liability
Texas Insurance Code provides statutory penalties; treble damages available
New York Relatively insurer-friendly; bad faith claims are more difficult to pursue
Some states Allow direct private lawsuits for bad faith
Other states Require you to file with the Department of Insurance before suing
Key Bad faith law varies dramatically by state — consult a local attorney