Getting insurance means that you intend to protect your vehicle, home, or business. Aside from these, it also covers medical and health expenses. Thus, getting insurance is your financial safety net, especially when bad things happen. But sometimes, you don’t acquire its full benefits due to bad faith practices. Plus, if you aren’t knowledgeable about them, your insurance company can take advantage of you. It can be a hassle.
What is Bad Faith Insurance?
There are many ways in which insurance companies try to renege on their obligations to their clients. It can come as either not paying for a claim or refusing to investigate a policyholder’s claim within a reasonable time. There are various behaviors in which insurance companies act in bad faith. You must be aware of these to smoothly identify them and ask for help from a trusted attorney.
Why Do Insurers Engage in Bad Faith Practices?
Remember that insurance companies are businesses making money. They earn cash when collecting insurance premiums and lose it when paying claims. Unfortunately, this pushes some of them to engage in bad faith practices. Thus, as much as possible, they do what they can to avoid paying for your claims.
Examples of Insurance Bad Faith
Bad faith happens any time an insurance company fails to uphold its responsibilities to you as the policyholder. Know the various tactics they use to abuse their power.
Lack of Communication
When insurers reduce or cut their communication with you after filing a claim, they are likely avoiding responsibility. They may not acknowledge receipt of your email or fail to move with the investigation. Communication with your insurance company must be seamless! Getting answers to questions shouldn’t take a long time. It is their job to keep you informed by providing appropriate responses.
Denying a Claim Without Giving a Reason
Insurers must explain why they deny your claim. When they do this, they are probably denying it for invalid reasons. It is not appropriate for them to leave you hanging. An instance is when they dismiss your valid reason for a car repair after involvement in an accident.
Changing or Canceling Your Policy
Another bad faith practice is changing or canceling your policy without informing you beforehand. Why do they do this? It is to minimize the compensation you receive or to deny the coverage. This puts you into the newly modified policy instead of the original. Thus, you must keep a copy of the original policy to prevent insurers from doing this.
Failing to Conduct a Prompt and Complete Investigation
It is a part of the insurer’s duty to make an investigation on the claims you filed. It is to ensure that all damages and losses are accounted for. In addition, it is to identify any liable parties. An example, an insurer can deny your claim after your house catches fire even without thoroughly examining the situation. They won’t look at what caused the fire or the extent of your coverage.
Offering Less Money Than a Claim is Worth
The main reason why insurers offer less money is that they don’t want to pay you more than they have to. Thus, they lowball their offer. They have nothing to lose when they do this. Plus, when you accept, they escape a fraction of their responsibility. For example, your total medical bill from the injuries you incurred as a motorist is $15,000. Your insurance covers $5,000, but your insurer only pays $1,000. That’s $4,000 less than what you’re supposed to be receiving!
Refusing to Pay a Valid Claim
Another bad faith practice to look out for is when your insurer refuses to pay for your valid claim. Your insurance policy is a contract. Thus, they’re breaching it if they don’t fulfill their obligations to you as the policyholder. An example is the refusal to pay damages from the tornado that hit your home.
Making Threatening Statements
In other cases, your insurer can threaten you so you won’t continue with your claim. They do this to run away from responsibility. An example is when you are accused of arson after filing a fire claim. Moreover, they threaten to call the police.
Delaying Payment of a Valid Claim
You should receive your claims on time. When your insurer delays payment, they’re likely doing it in bad faith. A case in point is when they accept to pay for repairs in your auto claim. However, they do not issue you a check for several months.
Dealing with Insurance Bad Faith
Remember that not all insurance companies act in good faith towards you. If any of the above happens, it is always best to call a trusted attorney to back you up. It is one excellent way to protect yourself. Plus, dealing with settlement difficulties is hard on your own. Ensure you keep records and detailed documentation of your communication with your insurer.
The Bottom Line
Don’t be hesitant to get insurance due to bad faith practices. Although some insurers do this to gain something in their business, not all have ill intentions. However, it is still advantageous for you to know several tactics to protect yourself. Keep an eye out for all of the above and call a trusted attorney to represent you.
Viciti Law has focused its legal representation on cases involving personal injury and insurance claim denials. We have the expertise to assess your case and fight for your best interests. Discover your legal options and how our firm can assist you in obtaining the settlement you are due from the person or entity that caused your injuries. Contact us today and schedule a free consultation.
