5 Ways You Can Tell When an Insurer Is Acting in Bad Faith

ways to find out if your insurance company is acting in bad faith

When insurance companies try to renege on their obligations to policyholders by denying legitimate claims or failing to process claims within a reasonable amount of time, this is known as acting in bad faith. Insurers are also acting in bad faith when misrepresenting their contracts’ language, making last-minute changes to policies, or failing to disclose plan exclusions and limitations at the time of purchase.

Bad faith ultimately prevents policyholders from getting the protection they want, need, and expect when paying for coverage. Although not every situation is the same but if you feel this might be happening to you, here are five signs that will help to gauge if an insurer might be acting in bad faith.

1. Failing to Communicate After a Claim Has Been Filed

Timing is everything after an accident. Accident victims are often facing fast-mounting medical bills, lost wages, and other damages that have an immediate impact on their financial well-being. Having a hard time getting in touch with an insurer can be incredibly distressing. Sadly, failure to communicate after a claim has been filed is often a serious attempt to avoid reaching any settlement at all. 

After you’ve filed a claim, communicating with an insurance company should be easy, even if you don’t always hear exactly what you want to. If your insurer is refusing to take your calls or failing to return them, you should consider getting in touch with a bad faith insurance claim attorney.

2. Issuing a Claim Denial Without Valid Cause

Another example of bad faith actions is outright claim denials before all of the necessary research has been performed. Every claim that gets filed requires due consideration. A quick claim denial without investigation might mean that an insurer is hedging its bets that you’ll give up and simply cover your own expenses. 

This is frequently the case with relatively minor car crash claims for which the average settlement amount tends to be nominal. By making the claims process unnecessarily tedious and difficult, some insurers hope that claimants come to see further pursuit of settlement monies as being less than worthwhile. 

Keep in mind that insurance companies do have the legal right to deny claims, so long as they have valid reasons for doing so. Thus, if your claim is denied, your insurer should be able to provide you with a clear and understandable reason why. If such a reason is never provided, the company is likely acting in bad faith. 

3. Delaying Settlement Payments

Even when agreeing to pay reasonable settlement amounts for claims, insurance companies can still act in bad faith by failing to pay the agreed-upon sums in a timely and appropriate manner. 

Insurance companies can create long delays in payment by requesting excessive evidence and documentation before remitting funds or by ceasing or delaying communication after an agreement has been reached. 

Not only should insurance companies pay claims within a reasonable amount of time, but they should also issue accompanying written statements that break down the specific coverages or losses for which payments are being made.

4. Cancelling or Changing Your Policy Without Prior Notification

 Always retain a physical or digital copy of your original insurance policy. One bad faith strategy that insurance companies commonly use is to cancel policies or alter them without providing adequate prior notification. 

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Random Success Quotes to Remember ~ “Successful people do what unsuccessful people are not willing to do. Don't wish it were easier; wish you were better..” - Jim Rohn

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This is done in an effort to deny coverage outright or to limit compensation amounts. In these cases, claim eligibility and settlement amounts are determined based upon policy revisions, rather than the original coverage terms. 

Insurance policies can also be drafted such that they are incredibly difficult to understand. When policies appear to be purposefully written to conceal specific provisions or limitations, this can also be deemed as acting in bad faith. Like all other companies, insurers must be forthright about the products and protections they’re selling.

5. Attempting to Settle for Far Less Than a Claim Is Actually Worth

Claimants should never feel rushed or pressured into settling too soon or for less money than their claims are actually worth. The overarching goal of claims adjusters is to limit their employers’ losses by negotiating the lowest possible settlement amounts. 

While these professionals certainly have the right to negotiate fair offers, they shouldn’t attempt to convince you that only a portion of your losses can be covered, or that a first offer is a final and non-negotiable one. Acting in bad faith claims payout

Rushing you to settle too soon could prevent you from accurately calculating your full range of losses, especially if your medical treatments aren’t complete and your injuries aren’t completely healed. You might:

  • Require additional medical services that add to your total medical bills
  • Miss additional time from work
  • Discover latent pain or injuries that have yet to be diagnosed or treated. 

Moreover, whenever you accept less money than your claim is worth, you become unable to return for more.

Conclusion 

People purchase insurance with the intention of protecting themselves from financial hardship in case of a severe accident. When insurance companies fail to clearly define the terms of their policies or fail to adhere to them, this is known as acting in bad faith. 

Taking legal action against bad-faith actors will allow you to get the settlement you deserve. It can also result in additional compensation for any added stress, pain, and suffering in the form of punitive damages.

About the author, Michelle Eddy About the author…

I am a staunch consumer advocate, fresh libertarian convert, a mother of three, and a part-time blogger. I cover varied topics from parenthood and child development to education and law, with a strong emphasis on consumer rights and helping the little guy stand up for their rights. My favorite movie quote is “Sir, we are outnumbered 10 to 1.” “Then, it is a fair fight!”

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