When accidents happen, insurance firms are meant to offer financial protection. You expect that your insurer, or the insurer of the person who caused the damage, will treat your claim equitably if you are harmed. Unfortunately, some insurance firms operate in bad faith to avoid paying fair compensation and put profits ahead of policyholders.
Some insurance firms unfairly withhold payments, reject legitimate claims, or make lowball settlement offers during the insurance claims process in the hopes that injured parties will take less than they are entitled to. You can fight back and get the money you need for lost wages, medical costs, and other damages if you know your rights and are aware of these strategies.
What Is Bad Faith Insurance?
When an insurer does not handle a claim in good faith, it is known as bad faith insurance. The insurer may employ unethical or unfair methods to lower payouts or avoid making payments instead of upholding its policy obligations.
Common Bad Faith Tactics Used by Insurers
To reduce compensation, many insurers employ delay, deny, and defend tactics. The following are a few of the most popular bad faith strategies:
1. Unjustified Denials of Claims
Insurance companies may deny claims without giving a clear explanation or with vague justifications that don’t fit the policy’s terms.
2. Postponing the Claims Procedure
In an effort to make policyholders desperate and agree to a reduced settlement, insurers may purposefully delay investigations or payments.
3. Misrepresenting the terms of the policy
Although certain damages are covered, some insurers inform policyholders that they are not. Victims may be discouraged from seeking just compensation by this false information.
4. Making Lowball Offers
Insurers can make settlement offers that are much less than the amount that a victim truly needs, rather than paying for all medical expenses, lost income, and pain and suffering.
5. Disregarding Medical Reports or Evidence
To justify a smaller compensation, insurers may minimize or disregard important information, such as expert evaluations and medical records.
How to Recognition and Handle Bad Faith Practices
Here’s how to defend yourself if you think an insurer may be acting in bad faith:
1. Know Your Rights
The laws require insurance companies to resolve claims fairly and honestly. You can identify violations by being aware of your policy and state insurance regulations.
2. Maintain Thorough Records
Keep a record of all communications with the insurance provider, including:
- Phone calls (date, time, and details)
- Letters and emails
- Bills and medical records
- Any written statements from the insurance company
3. Ask for a Written Explanation
Request a written explanation outlining the precise grounds for any denial or delay in processing your claim. Insurers must provide this information.
4. Stay Persistent
Avoid being pressured by an insurance provider to accept an unfair offer. Consistently follow up and question any vague or misleading statements.
5. Seek Legal Advice
A personal injury lawyer can assist you if you think an insurer has been acting in bad faith. Attorneys have experience with insurance practices and can convince firms to handle claims fairly, or they can take legal action if needed.
Legal Actions You Can Take Against Bad Faith Insurance
You have a number of legal options if an insurer acts in bad faith:
1. Submit a Complaint to the State Insurance Department
You can file a complaint against insurers who are acting unethically with the Department of Insurance in every state.
2. Pursue a Bad Faith Lawsuit
- You can sue the insurance provider for acting in bad faith. If you’re successful, you could get back:
- The entire sum of your original claim
- Additional damages resulting from actions taken in bad faith
- Court charges and legal fees
3. Seek Punitive Damages
In severe circumstances, courts may award punitive damages to punish the insurer for unethical activity and deter further misconduct.
