Most Common Bad Faith Insurance Practices
You did your research, found what you believed to be the best insurance company, and even purchased the types of insurance that would protect you from damage to your property. What you didn’t realize is that sometimes insurance companies act in bad faith, even reducing or refusing payment on your insurance claim. There are many ways that a bad faith insurance company can try to get out of paying you what your insurance claim is worth.
Five Most Common Bad Faith Insurance Practices
- Misrepresenting Policy Coverage or the Law – Insurance policy contracts are filled with legal terminology that the average person doesn’t understand. A bad faith insurance company can easily misrepresent what is and is not covered under the policy, and the average policyholder probably wouldn’t know the difference. An insurance company may also try to scare you by saying that since you were partially responsible for the damage to your property, you cannot submit a claim for the damage without committing insurance fraud.
- Failing to Properly Investigate a Claim – Insurance companies have a duty to investigate claims as thoroughly and quickly as possible. That includes examining evidence; talking with witnesses, policyholders, and investigative agencies; and concluding the claims process in a reasonable amount of time.
- Delaying Claim Payouts – By increasing the amount of time it takes to investigate and pay on a claim, policyholders may either give up on being paid or may be willing to accept less money for their damaged property. Therefore, insurance companies will use delaying tactics on paying out on insurance claims.
- Making Unreasonably Low Settlement Offers or Refusing to Pay – Insurance companies are prohibited from lowering the value of a claim or refusing to pay out on a valid claim. It is not uncommon for insurance companies to make low-ball offers in the hope that the policyholders won’t understand the extent (dollar value) of their loss, or to tell policyholders that their insurance doesn’t cover the loss.
- Using Deceptive Practices – Insurance companies are supposed to protect their policyholders. Whenever asked, they are supposed to tell their policyholders how much coverage they have, what their coverage protects them from, how to file claims after a loss, how long they have to file the claim, etc. Any time that an insurance company actively fails to disclose important information or hides policy coverage from policyholders, they are acting in bad faith.
As a layperson, it isn’t easy understanding what an insurance policy covers. So, what can you do if you feel that your insurance company isn’t being fair with you? First, read your insurance policy and try to figure out what it says. If you still don’t understand the policy legalese, contact an experienced property and casualty insurance lawyer for help. Property and casualty insurance lawyers know the laws that regulate insurance companies and can make sure that you are being treated fairly. At Smythe Law Group, Inc. we assist property owners with their insurance claims. Contact us for a consultation.