What Does an Insurance Expert Look for in a Bad Faith Case?

When an attorney is handling an insurance bad faith case, one of the most important questions may be:

Answering that question often requires more than simply reading the insurance policy or reviewing the final coverage decision.

An insurance expert may evaluate the entire claims-handling process—including the investigation, documentation, communications, timing, coverage evaluation, and actions taken by the insurer—to determine whether those actions were consistent with applicable insurance industry practices and standards.

The expert’s job is not to decide the ultimate legal question of whether an insurer committed bad faith. That determination belongs to the court or jury. Instead, a qualified insurance expert can help attorneys, judges, and juries understand how insurance professionals are expected to handle claims and whether the conduct at issue was consistent with accepted industry practices.

Insurance bad faith generally involves allegations concerning an insurer’s handling of a claim or its obligations to an insured.

The specific legal requirements vary depending on the jurisdiction and circumstances of the case.

From an expert witness perspective, the important question is often not simply whether a claim was paid or denied.

The analysis may involve how the insurer reached its decision.

That can include examining whether the claim was properly investigated, whether relevant information was considered, whether communications were appropriate, and whether the claims-handling process was consistent with applicable industry practices.

The exact scope depends on the issues in the case.

An expert may be asked to evaluate:

The goal is to understand not only what happened, but also how and why the insurance professionals involved reached their decisions.

This can make it one of the most important sources of information in an insurance dispute.

An expert may examine items such as:

The claim file may help reconstruct the decision-making process from the time the claim was reported through its resolution.

This is important because evaluating claims handling should generally consider the information available at the time decisions were being made, rather than judging those decisions solely with the benefit of hindsight.

A qualified insurance expert may evaluate whether the claims-handling process was consistent with accepted industry practices relevant to the circumstances.

That could include questions such as:

The answer to any one question may not determine the entire case.

Insurance claims are often complicated, which is why the complete claims-handling process should be considered in context.

A delay by itself doesn’t necessarily establish improper claims handling. There may be legitimate reasons why a claim requires additional investigation or information.

The expert may instead examine questions such as:

The context surrounding the delay matters.

An experienced insurance professional can help explain what may be typical or appropriate under the circumstances.

An expert may look at whether the investigation addressed the information necessary to evaluate the claim.

That can involve reviewing:

A thorough investigation doesn’t necessarily mean every possible piece of information must be collected.

The question is whether the process was appropriate given the nature of the claim and the information available at the time.

Depending on the case, an expert may be asked to explain accepted practices involving insurers, adjusters, agents, brokers, risk managers, or other insurance professionals.

That analysis may consider:

An expert’s practical insurance industry experience becomes particularly important here.

Understanding how insurance organizations operate in the real world can provide context that may not be apparent from reviewing individual documents alone.

Insurance policies can involve complicated language, exclusions, endorsements, conditions, and factual questions.

An insurer and insured may disagree about coverage without that disagreement necessarily establishing improper claims handling.

For an insurance expert, the focus may be on the process used to evaluate the claim and whether that process was consistent with applicable insurance industry practices.

Insurance experts may discuss insurance terminology, industry practices, policy structure, claims procedures, and other matters within their expertise.

However, experts need to be careful about crossing the line into offering legal conclusions reserved for the court.

The exact permissible scope of expert testimony depends on the jurisdiction, issues presented, and rulings of the court.

This is one reason attorneys should define the expert’s assignment carefully before the expert begins forming opinions.

Insurance disputes can arise from many different types of coverage.

Depending on the expert’s qualifications and experience, cases may involve:

The important consideration is matching the expert’s actual insurance experience to the specific issues involved in the case.

Someone who understands one area of insurance isn’t automatically qualified to provide opinions about every other area.

The materials depend on the assignment, but an attorney may provide documents such as:

Providing the appropriate documents allows the expert to understand the complete context surrounding the issues being evaluated.

An attorney should also clearly identify the questions the expert is being asked to address.

An experienced insurance expert may help attorneys identify important documents, understand insurance terminology, recognize industry-specific issues, and determine what additional information may be relevant to the analysis.

Waiting until immediately before an expert deadline may limit the time available for a thorough review.

Early involvement can be particularly valuable when a case involves extensive claim files, complicated commercial coverage, multiple insurance professionals, or specialized insurance issues.

A credible expert should understand the limits of the assignment.

An expert should not simply advocate for the party who retained them.

Instead, opinions should be based on:

The expert should also avoid offering opinions outside their area of expertise or reaching legal conclusions that belong to the court.

A strong expert opinion should be one the expert can clearly explain and defend during deposition and cross-examination.

Look beyond the word “expert.”

An attorney should consider whether the individual has meaningful experience with the specific insurance issues involved in the case.

Questions worth asking include:

Practical experience can be particularly valuable when the case involves claims handling, underwriting, agency operations, risk management, or standard-of-care issues.

Commercial property, auto, liability, and specialty insurance can present very different issues.

The expert should be able to explain how the evidence was evaluated and how the opinions were reached.

A written report is only part of the job.

The expert may eventually need to defend those conclusions during deposition or trial.

The permissible scope of testimony depends on the jurisdiction and the court. An insurance expert generally provides opinions within their area of expertise concerning insurance industry practices, claims handling, and professional standards rather than deciding the ultimate legal issue for the court or jury.

There isn’t necessarily one document that determines the case, but the claim file can be extremely important because it may show the investigation, communications, documentation, and decision-making process over time.

Yes, when the expert has appropriate experience relevant to commercial property insurance and the particular issues involved in the dispute.

An appropriately qualified insurance expert may evaluate claims-handling practices and other insurance issues involving auto or commercial auto claims when those matters fall within the expert’s experience.

Specialty insurance can involve unique coverage, underwriting, claims, and industry practices. Attorneys should look for an expert whose professional background matches the particular specialty involved in the dispute.

Yes. When the dispute centers on insurance practices, practical industry experience can help the expert explain how insurers, adjusters, agents, brokers, and risk professionals operate and how accepted practices apply to the facts of the case.

When an attorney is evaluating a potential insurance bad faith case, the question isn’t simply whether the insurer paid or denied the claim.

An insurance expert may examine the investigation, claim file documentation, communications, timing, decision-making process, applicable standards, and the conduct of the insurance professionals involved.

The expert then uses insurance industry experience and an independent methodology to explain those issues in a way that attorneys, judges, and juries can understand.

And when the expert takes the stand, those opinions must be clear, supportable, and defensible.

Gulf Coast Risk Management provides expert witness and litigation support services involving insurance industry practices, claims handling, standard of care, risk management, Certificate of Insurance issues, and other complex insurance matters.

Our experience includes issues involving commercial property, auto and commercial auto, specialty insurance, insurance agency operations, claims practices, and risk management.

We work with attorneys to independently evaluate the facts, documentation, and insurance practices at issue and provide opinions grounded in real-world industry experience.