Insurance companies have the right to deny an insurance claim when they have valid reasons for doing so. When they deny claims without any reasonable basis, refuse to investigate a complaint, or use tactics to unnecessarily delay a claim, they may be acting in bad faith.
It is essential to know the difference between bad faith and everyday business for the insurance company. Never assume that denial means the insurance company is acting in bad faith, but also do not think that if your claim is unfairly denied you have no options for recourse.
If you suspect bad faith, it is vital that you meet with an attorney that handles these types of claims. An attorney can review your denial, the evidence, and determine if you are the victim of bad faith insurance practices.
What Are the Most Common Bad Faith Practices by Pasco Insurers?
Bad faith means that the insurance company is dishonest or using unfair practices when handling a claim. They could be your own insurance company or the insurer you have filed a claim with in an accident case.
Some common actions that qualify as bad faith include:
Creating Unreasonable Delays When Assessing a Claim
Insurance companies might purposely extend the time it takes for claim investigations before they offer a settlement. They often do so in hopes that the person filing the claim or the policyholder will give up on pursuing it or become desperate enough to accept any payout they offer.
Every state has a deadline for how long an insurance company has to investigate and reasonably decide on a claim. Generally, this is 15 to 60 days. If the insurance company does not investigate within that timeframe or purposely makes the policy owner or claimant wait, they are practicing in bad faith.
Failing to Conduct a Complete Investigation
Insurance companies are required to investigate quickly and thoroughly any time they consider a claim. This includes physically examining evidence, talking to witnesses, speaking to the claimant and policyholder, and only making a conclusion after they have exhausted their investigative obligation.
If an insurance company denies a claim without investigating, they are acting in bad faith. For example, the claims adjuster calls you, asks a few questions about your car accident, then denies the request by saying it was pre-existing damage. The claims adjuster never examined the vehicle in person or reviewed body shop estimates; therefore, they failed their duty to investigate.
Using Deceptive Practices
Sometimes, insurance companies do investigate and they may even do so quickly. During your claim processing, they fail to disclose coverage that you have so that they still can deny the claim and not pay you.
Other times, insurance companies may fail to notify their policyholders about deadlines for filing a claim or purposely fail to provide paperwork so that the subscriber cannot file his or her claim.
These are just some examples of deceptive practices that could lead to a bad faith claim against the insurance company.
Insurance companies are supposed to protect their subscribers. They are supposed to notify them of coverage they have, their rights, and make accessing insurance coverage that they have paid for doable. Any time an insurance company covers up coverage or fails to disclose relevant information, they are acting in bad faith.
Offering Less Than Fair Value
An insurance company is strictly prohibited from avoiding payment to keep their profits high. They are also prohibited from lowering the value of someone’s claim to save. Any time an insurance company purposely lowballs a subscriber or someone filing a claim with them, offers less than the fair value, or uses unfair practices to lower the value of the claim they are acting in bad faith.
For example, you have quotes from three separate companies showing the damage to your vehicle – all showing similar damage and repair costs. The insurance company offers you half the value presented despite the fact you have higher coverage allowed in your policy.
Refusing to Pay a Claim
Instead of lowballing, an insurance company might outright reject to pay. Without any valid reason, an insurer cannot just deny a claim for coverage. If the policy should have covered that claim, the denial qualifies as bad faith.
For example, you were hit by an uninsured motorist. You have uninsured motorist coverage, followed all deadlines, and turned in all documentation requested. After submitting your claim, it is denied. The claim should be paid and under your policy would be paid. Therefore, the insurance company is acting in bad faith.
An insurance company making threats to policyholders or third parties submitting a claim are operating in bad faith. Not only can they be sued, but they should be reported to the state insurance board immediately.
For example, your insurance company threatens to sue you for submitting a claim.
Misrepresenting the Law or Policy
An insurance company might try to interpret your policy language so that it works against you. Ambiguous language in any insurance contract opens the door to this practice but does not mean the insurance company can get away with it. For example, an insurance company will try to tell you that you are guilty of insurance fraud if you submit your claim even though you were partially at fault.
Speak with an Attorney Immediately
If your insurance company engages in any of the bad faith practices above or you feel that you are purposely denied or unfairly treated, you may have a bad faith claim against the insurance company.
To explore these options, you need an attorney that has experience handling these types of claims. The team at Hames, Anderson, Whitlow & O’Leary can help you. Contact us today to discuss your options at 509-586-7797 or request a consultation online.