An insurance company is contractually obligated to handle a claim respectfully and within a reasonable amount of time. However, to try to save a buck, some insurance companies will engage in insurance bad faith, which, basically, means the company is intentionally doing something wrong to try to defeat the claim.
Insurance bad faith takes many forms. Because insurance companies know that insurance bad faith is unlawful and can land them in serious legal trouble, most forms of insurance bad faith are subtle and clever, so it becomes difficult to notice it is even happening. If you think your case is being intentionally mismanaged, then you should learn more about what insurance bad faith looks like, so you can catch it in the act.
Common signs of insurance bad faith are:
- Unclear denials: If an insurance policy is denied, the insurer must provide clear reasoning to explain why. Insurance bad faith often takes the form of misleading, unclear, or completely missing explanations for claim denials.
- Delayed payments: Once a claim has been accepted, an insurance company must pay the claimant the owed amount or the first installment within a short period of time, often within 14 business days. Intentionally delaying payments is a subtle form of insurance bad faith.
- No investigation: Insurance companies must investigate all claims using methods fitting the details of the claim. For example, if you file a homeowners’ insurance claim, then the insurer must send an insurance adjuster to appraise the condition of your home. Failing to investigate your case is insurance bad faith, especially if your case is then denied.
- Lowball offers: A popular insurance company tactic is to throw a lowball settlement offer at a claimant in hopes they sign it out of desperation. Once a settlement offer is signed, it cannot be retracted, and more compensation cannot be pursued.
- Policy changes: Your policy’s provisions cannot be changed in the middle of the contract term for any reason. An insurance company that attempts to make a revision or to cancel the policy early is committing insurance bad faith.
What Happens When An Insurance Company Acts In Bad Faith?
The worst thing that happens when an insurance company acts in bad faith is that the policyholder loses out. Each form of insurance bad faith is designed to save the insurance company money and, therefore, to cost the policyholder money by refusing to pay them the money they are owed. If you can prove that your insurer acted in bad faith, though, then you can sue them. A successful lawsuit could result in you getting a settlement that pays for all the coverage you were originally owed, as well as additional money to punish the insurance company for its corporate wrongdoing.
How Do I Prove The Insurance Company Is Acting In Bad Faith?
To prove that insurance bad faith was committed, you should save as many text interactions with your insurance provider as you can. Save all texts and emails and make hard copies of any communications that were sent to you in the mail. Don’t forget to also save a full copy of your insurance policy that has been dated and signed by you.
A paper trail is often the best and only way to prove that an insurance company has done wrong. In the right hands of a talented insurance attorney, the information you save yourself could be what saves your policy.
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