Insurance companies have an obligation to act in good faith towards policyholders and claimants. However, sometimes, they don’t. Here’s an insight into what “bad faith” means in this context:
“Bad faith” refers to an insurance company’s unfair practices or failure to uphold the terms and obligations of the insurance policy or the law. Essentially, it’s when they don’t deal fairly or promptly with the claimant.
Bad faith can manifest in various ways, such as:
Denying a Claim without Reason: Refusing to pay a valid claim without a valid basis.
Delayed Payment: Taking an unreasonable amount of time to pay a valid claim.
Underpayment: Offering to settle a claim for less than it’s worth without a valid reason.
Failing to Investigate: Not conducting a proper and timely investigation of the claim.
Example: You provide all the necessary documentation to prove a legitimate injury from a car accident. The insurance company, without a proper investigation, denies your claim. This could be considered bad faith.
3. Reasons for Bad Faith
Financial Motives: Insurance companies might act in bad faith to save money and increase profits.
Negligence: Inadequate processes, lack of training, or oversight can lead to poor claim handling.
Complex Policies: Sometimes, the complexity of insurance policies can be caused, by adjusters not fully understanding or misinterpreting them.
4. Identifiable Signs
Vague Denials: Denying a claim without providing a clear and specific reason.
Inconsistent Explanations: Changing the reason for denial or delay multiple times.
Ignoring Communication: Not responding to calls, emails, or letters about the claim.
Example: An insurance adjuster initially states that your medical bills are excessive but later claims they don’t have all the necessary documentation, even when you’ve provided everything asked for. This inconsistency might signal bad faith.
Victims of bad faith insurance practices might have the right to sue the insurance company for not only the amount owed under the policy but also for additional damages caused by undue stress and financial hardship.
Understanding when an insurance company is operating in bad faith is crucial to ensuring fair treatment and just compensation. If you believe you’ve encountered bad faith practices and require legal representation, The Mines Law Firm is prepared to advocate on your behalf.
Jasmine Mines, Esq.
The Mines Law Firm