When Your Insurance Company Acts in Bad Faith After a NC Car Accident

The Bottom Line

North Carolina gives accident victims two separate weapons against insurers who mishandle claims: a statutory list of 14 prohibited practices under GS 58-63-15, and an unfair trade practices cause of action under GS 75-1.1 that can triple your damages and force the insurer to pay your attorney fees. This page explains both paths, the signs that your insurer may be acting in bad faith, and the steps you should take right now to protect your rights.

What Is Insurance Bad Faith in North Carolina?

"Bad faith" describes conduct by an insurer that goes beyond a simple mistake or coverage dispute. In North Carolina, a bad faith claim has three elements under common law: (1) the insurer refused to pay a valid claim, (2) the refusal was in bad faith (meaning without a reasonable basis), and (3) the insurer's conduct was aggravating or outrageous enough to justify punitive damages.

This standard is intentionally high. Not every denied claim is bad faith. An insurer that investigates carefully and denies a claim for legitimate legal reasons is not acting in bad faith, even if you disagree with the outcome. The violation occurs when the insurer acts with improper motive — such as stalling to avoid paying, denying a claim it knows is valid, or refusing to investigate at all.

The Two Legal Paths for Bad Faith in NC

North Carolina accident victims have two distinct legal theories available against a bad-acting insurer. They can be pursued simultaneously.

Path 1 — Common Law Bad Faith: A common law bad faith claim asks a court to award punitive damages on top of your compensatory award. You must prove the three elements above — refusal to pay, bad faith motive, and egregious conduct. Punitive damages in NC are capped at the greater of $250,000 or three times compensatory damages under N.C. Gen. Stat. § 1D-25.

Path 2 — GS 75-1.1 Unfair and Deceptive Trade Practices: This statute is arguably more powerful. If an insurer's claim handling constitutes an unfair or deceptive act in commerce, the court must award treble (triple) compensatory damages and may award attorney fees. You do not need to prove outrageous conduct — just that the practice was unfair or deceptive. This standard is easier to meet than the common law standard.

14 Signs Your Insurer May Be Violating GS 58-63-15

N.C. Gen. Stat. § 58-63-15 lists specific unfair claim settlement practices that NC law prohibits. Here are the most common ones that appear in car accident claims:

1. Failing to acknowledge your claim promptly. Silence after you file a claim is itself a violation.
2. Not completing a reasonable investigation before denying or accepting a claim.
3. Refusing to pay without conducting an investigation based on all available information.
4. Failing to affirm or deny coverage within a reasonable time after your proof of loss is submitted.
5. Not attempting in good faith to make a prompt, fair, and equitable settlement when liability is clear.
6. Compelling you to file a lawsuit to recover amounts clearly owed under the policy.
7. Attempting to settle a claim for less than the amount clearly owed under the policy.
8. Delaying investigation or payment by requiring duplicate forms or unnecessary documentation.
9. Misrepresenting relevant facts about your coverage or the claim.
10. Issuing a check as "final payment" when the claim is still disputed.

What You Can Actually Recover

Understanding the damages picture matters before you decide whether to pursue a bad faith claim.

Compensatory damages: Whatever you were originally owed — medical expenses, lost wages, property damage, pain and suffering — plus any additional losses caused by the bad faith delay or denial (for example, medical bills that grew because the insurer stalled your treatment funding).

Treble damages (GS 75-1.1): Three times your total compensatory award. On a $100,000 underlying claim, treble damages bring the total to $300,000.

Attorney fees (GS 75-1.1): The court may require the insurer to pay your attorney's fees. This eliminates the financial barrier to fighting back.

Punitive damages (common law): Available in egregious cases under the common law bad faith theory, capped at $250,000 or 3x compensatory damages.

Bad Faith and Your Own UM/UIM Coverage

North Carolina mandates that every auto policy include uninsured and underinsured motorist (UM/UIM) coverage. When you are hit by an uninsured driver or a driver whose coverage is too low, you turn to your own insurer.

Your own insurer can also act in bad faith. When your insurance company disputes your UM/UIM claim without a reasonable basis, denies coverage it clearly owes, or stalls unreasonably while you wait for money to pay medical bills, the same bad faith rules apply. Many NC bad faith cases involve UM/UIM denials precisely because the relationship feels more personal — you are fighting your own insurance company, not a stranger's.

How to Document a Bad Faith Claim

Bad faith cases live and die on documentation. Start building your file immediately.

Gather every written communication:

• Your original claim filing confirmation
• All denial letters and their stated reasons
• Any "reservation of rights" letters
• Correspondence about investigation status
• Settlement offer letters

Create a phone call log. After every conversation with an adjuster, write down the date, time, the adjuster's name, and what was said. This contemporaneous record is valuable evidence.

Request your claim file. In litigation, your attorney can obtain the insurer's internal claim notes, investigator reports, and supervisor approvals through discovery. These documents often reveal the true reason for the denial — and whether it was legitimate.

Preserve your own evidence. Medical bills, repair estimates, photographs, and witness statements all support the underlying claim. The stronger your underlying claim, the harder it is for the insurer to justify a denial.

Filing a Complaint with the NC Department of Insurance

A lawsuit is not your only option. The NC Department of Insurance has authority under GS 58-2-164 to conduct market conduct examinations and take regulatory action against insurers with systemic claim handling violations. You can file a complaint at the NC DOI website.

What a DOI complaint can do: Trigger an investigation, require the insurer to respond formally, and — in serious cases — result in fines or license revocation.

What it cannot do: Award you personal compensation. The DOI acts on behalf of the public, not on behalf of individual claimants. A regulatory complaint is most useful as leverage or as a supplement to a private lawsuit.

Filing both simultaneously is a common strategy: the lawsuit seeks your compensation while the DOI complaint puts regulatory pressure on the insurer.

FAQ: NC Insurance Bad Faith Questions

Frequently Asked Questions

Can I sue my own insurance company for bad faith in North Carolina?▾

Yes. NC recognizes both a statutory cause of action under GS 58-63-15 (unfair claim settlement practices) and a common law bad faith tort. If your insurer wrongfully denied a valid claim with an improper motive, you may seek punitive damages and, under GS 75-1.1, treble damages plus attorney fees.

What does NC law require insurance companies to do when handling my claim?▾

Under N.C. Gen. Stat. § 58-63-15, insurers must acknowledge your claim promptly, complete a thorough investigation, affirm or deny coverage in a reasonable time, and not deny claims without a reasonable basis. Failing any of these requirements can constitute an unfair claim settlement practice.

What are treble damages and how do they apply to insurance bad faith in NC?▾

Treble damages triple the compensatory award you receive. Under N.C. Gen. Stat. § 75-1.1, if an insurer engages in unfair or deceptive acts in commerce, a court can award three times the actual damages plus reasonable attorney fees. This makes GS 75-1.1 one of the most powerful tools against bad faith in NC.

How long do I have to file a bad faith claim against my insurer in NC?▾

Bad faith claims in NC typically have a 3-year statute of limitations under GS 1-52 for contract-related claims, but GS 75-1.1 unfair trade practices claims also carry a 4-year limitations period. Because the clock starts from the date of the wrongful act, consult an attorney promptly if you believe your claim was handled improperly.

What is the difference between filing a complaint with the NC Department of Insurance and filing a lawsuit?▾

An NC DOI complaint triggers a regulatory investigation. The DOI can sanction the insurer or require corrective action, but cannot award you damages. A lawsuit — especially one under GS 75-1.1 — seeks actual compensation, treble damages, and attorney fees. Both options can run simultaneously and are not mutually exclusive.

Does bad faith apply when my own insurer denies a UM/UIM claim?▾

Yes. NC requires all auto policies to include uninsured/underinsured motorist (UM/UIM) coverage. When an insurer wrongfully denies or low-balls a UM/UIM claim without a proper investigation, it faces the same bad faith exposure as with any other claim. This is one of the more common bad faith scenarios in NC car accident cases.

What records should I gather to build a bad faith case against my insurer?▾

Start with every written communication: denial letters, reservation-of-rights letters, adjuster notes (obtainable through discovery), and claim activity logs. Preserve emails, keep a dated journal of every phone call, and save any document the insurer gave you about your policy's coverage. The stronger your paper trail, the stronger the bad faith case.