What can I do regarding a bad faith claim?
Question Details: We had a solar panel system that was destroyed 10 months ago. The insurance company sent a check for $14,000, however the system was 2 weeks old and cost $30,000. They are trying to replace it with an inferior setup and I have called every solar installer in the state and the cheapest one would do it for is $26,000. They have been caught lying several times and refuse to acknowledge any of the estimates. I had an engineering group that specializes in solar panel systems draw up a very detailed report showing why the third party installer they hired to come and bid it is so wrong and they still will not budge. Statute of limitations is getting close and I didn't know if I had a claim or not? The insurance company knows nothing about solar and the third party they brought in is a joke.
An insurance policy is a contract: the insurer must pay when, and the amounts, required by the policy. If you feel--as you evidently do--that they are not honoring their policy obligations but are proceeding in bad faith and paying less than they should, file a "breach of contract" lawsuit against them now, if the statute of limitations is running out, to preserve your right to sue them. (Once the SOL runs out, it doesn't matter how good your claim is--it will be too late.)
In terms of how strong your case is likely to be, or even if you truly have a case: what does the policy say--do they have to pay the replacement value or otherwise replace the system? Or are they obligated to pay the then-current value of the system (what it was worth as of when it was destroyed)? Look to the policy to see what the obligation actually is.
If they have to replace it, then based on what you write, they are likely violating their obligations by looking to replace it with a system that is not comparable and ignoring estimates. But if they have to only pay its then current value, then ignore what you in fact paid (since it's possible you got a bad deal or overpaid) and get a realistic appreciaton for the true worth or value of the system as of when it was destroyed. If it's value was realistically $20k or less at the time, it's probably not worth taking legal action, since given the cost of litigation and and the fact that you most likely had a deductible, you might not really come out ahead through litigation, as compared to taking the $14k. But if the value was around $26k - $30k, then again, if they are ignoring evidence of its value, they are probably in breach of their obligations and a suit is likely worthwhile.