Insurance Bad Faith
Written by AskTheLawyers.com™
Have You Suffered from Insurance Bad Faith?
Ask an Insurance Bad Faith Lawyer for Legal Advice
The term “insurance bad faith” refers to an insurance company’s failure to deal justly with the people they insure in order to avoid paying a claim. In these situations, a claim can be filed against the insurance company by a policyholder who has been harmed by the company’s show of bad faith. There are a variety of red flags that may indicate that insurance bad faith is at play, so it is important to remain aware of how they are treating you. If you feel that your loss is not being taken seriously or compensated fairly, do some research into what you should and shouldn’t expect from an insurance company. If you suspect that you or a loved one are suffering from insurance bad faith, contact an insurance bad faith attorney to learn more about your options and how to get the help you and your family need.
Whenever you find yourself dealing with an insurance company, it can be helpful to remember that the way they make their money is by reducing and denying as many claims as possible, regardless of their validity. This means that policyholders need to be on the lookout for signs that an adjuster might be using unscrupulous methods to avoid paying out a claim. However, the accusation of insurance bad faith is serious, and often the mention of it in a conversation with the adjuster might be enough to deter it from happening. However, the next step if the insurance bad faith continues is to file a letter of complaint with the insurance company itself and contact an attorney.
Warning Signs of Insurance Bad Faith
Anyone with insurance of any kind should be aware of the typical warning signs which indicate that insurance bad faith might be occurring. This can be an extremely damaging phenomenon, and often results in a compounding of the financial, mental, and emotional struggle a family goes through after an accident. It is imperative that any suspicions of insurance bad faith are addressed immediately.
Let’s go over some important warning signs that could indicate insurance bad faith:
- Poor communication. The failure to respond to or a delay in responding to a policyholder’s questions or concerns could indicate that bad faith is at play. Additionally, evading questions or providing only vague information could be a tip-off that an adjuster has reasons to not be forthcoming.
- Requests for unnecessary evidence. When an insurance adjuster requests evidence or documentation regarding the accident or situation that caused the need for insurance, but the evidence requested does not seem pertinent to the validity of the claim, this could indicate insurance bad faith.
- Unreasonably low settlement. Unfortunately this is one of the most common ways that insurance bad faith occurs. Oftentimes the initial settlement offer an insurance company makes to a policyholder is intended to low-ball the policyholder into accepting an amount that is insufficient to cover their damages. In many cases the policyholder’s coverage actually entitles them to a greater amount of compensation.
- Intentionally misinterpreting policy language. If the adjuster you are speaking with seems to be intentionally misinterpreting their own policy language, this is a major red flag.
- Deliberately misinterpreting your records. Another common type of insurance bad faith occurs when an insurance adjuster deliberately misinterprets a policyholder’s records in order to deny or reduce a valid claim for compensation.
- Unreasonable/Repetitive delays in paying your claim. When this occurs it can be frustrating enough that some policyholders choose to forgo pursuing the claim, but this is a mistake. It is important to continue pressing the issue until it is resolved.
- The company requests that you pay part of the settlement yourself outside. This occurs when an insurance adjuster requests that the policyholder pay part of their own settlement outside of a pre-existing agreement to do so based on the policy.
- Failure to conduct a thorough investigation. This occurs when a company fails to conduct or attempt a thorough investigation of the situation, often in an effort to avoid acknowledging the reason the claim is necessary.
Do You Have a Claim for Insurance Bad Faith?
The rules about what constitutes bad faith vary from state to state, and can be difficult to prove. This is why it’s a good idea to speak to a lawyer and learn what your rights are, as well as learn more about the process of filing a claim against an insurance company. If an insurance company can be proven to have behaved in bad faith, the company is then liable to pay not only what they owed the policyholder based on the initial contractual agreement, but also additional damages that occur as a result of the delay or refusal to pay an insurance claim. Other damages which might be included in an insurance bad faith claim are:
- Contract damages: This refers to the amount of money the insurance company owed the policyholder up to the policy limit.
- Compensatory damages: These damages refer to the ways that a policyholder suffered due to an insurance company’s refusal or delay in paying a claim. This could include emotional distress, loss of professional reputation, financial hardship, etc.
- Punitive damages: These damages exist primarily to punish the insurance company for its bad faith and are intended to deter the company from repeating that behavior in the future. Punitive damages are not applicable in every case, and usually only when the insurance company’s behavior was particularly bad.
If you or a loved one have suffered from insurance bad faith, seek legal counsel to learn about your options for recovery as well as how to begin the process of filing a claim if necessary.