What is Bad Faith Insurance: 8 Signs to Watch Out For

Insurance is meant to assist us when we need it most, protecting against financial losses from injuries or property damage. However, this does not always happen as promised. If so, can the victim file a claim against the insurance company for bad faith?

Unfortunately, in some cases, insurers default on their obligations and leave the policyholders to foot the bill.

In this blog, we’ll explore common signs of bad faith insurance and how to recognize them.

What is Bad Faith Insurance?

Bad faith insurance occurs when an insurance company misrepresents its policies and obligations to clients and improperly denies a claim. This can happen when the insurer denies a valid claim without first investigating it.

Failure to disclose policy limitations before signing the contract is a red flag. Additionally, unreasonable demands from the insurer may lead to unjust claim denials for the policyholder.

How to Prove Bad Faith Insurance

Identifying bad faith insurance practices involves several steps:

Gather Evidence

Collect any documentation showing the insurer’s mishandling of your claim. Keep records of all communications, including emails, letters, and other relevant documents.

Document Communication

Maintain a thorough record of all interactions with your insurance company, including phone calls and in-person conversations. These records can serve as valuable evidence.

Seek Legal Advice

If you suspect bad faith insurance, consult a lawyer specializing in insurance law before confronting your insurer. They can provide guidance on your rights and the best course of action.

By following these steps and seeking legal assistance, you can effectively prove bad faith insurance and take appropriate action to protect your rights.

8 Signs That Your Insurance Company Is Acting in Bad Faith

Your insurer may be acting in bad faith if it fails to uphold its obligations outlined in the insurance policy, and, and if so, it could lead you to file a claim. Knowing the warning signs can help you spot such behavior:

1. Lack of Communication

If your insurer fails to respond promptly or provide necessary information after an accident, it suggests an attempt to evade responsibility. Ensure you keep detailed records of all communications, including emails, letters, and phone calls, to support your case.

2. Unreasonable Demands for Documentation

Insurers may complicate the claims process by requesting irrelevant documents, hoping to discourage you from pursuing your claim. So be careful to provide only the necessary documents related to your accident.

3. Lowball Settlement Offers

Beware of initial settlement offers significantly lower than expected. Insurers may try to lowball you or pressure you into accepting less than you deserve. Therefore, consider consulting with a qualified attorney to evaluate the fairness of any settlement offer.

4. Denying a Claim Without a Cause

Insurers must give valid reasons for claim denials. So if your claim is denied without explanation, it raises the suspicion of bad faith. If so, ask for a detailed explanation of the denial and consider seeking legal advice to challenge it if necessary.

5. Failure to Pay

Delayed, insufficient payments, or outright refusal to pay indicates bad faith on the insurer’s part. Keep track of payment deadlines and follow up promptly if you encounter payment delays or issues.

6. Changing or Canceling Your Policy

Your insurer should notify you before making any changes to your policy terms. Any alterations should align with the original agreement. Review any proposed changes carefully and seek clarification from your insurer if needed.

7. Processing Delays

Deliberate delays in investigating or processing claims may be an attempt to dissuade you from pursuing your rightful compensation. Therefore, it’s important to stay informed about the status of your claim and to escalate the matter if you encounter undue delays.

8. Misrepresentation of Policy

Both insurers and policyholders are obligated to act in good faith and honesty. Any misrepresentation of policy terms is a breach of this obligation. Familiarize yourself with the terms of your policy and promptly report any discrepancies to your insurer.

By staying vigilant and recognizing these warning signs, you can better protect yourself against bad-faith insurance practices and ensure fair treatment from your insurer.

How to Sue an Insurance Company for Bad Faith

Suing an insurance company for bad faith requires careful steps and consideration. Here’s a guide on how to proceed:

Understand Your Policy

Study your insurance policy in detail, paying close attention to coverage, limitations, and exclusions. Furthermore, understanding your policy terms will help you assess whether the insurer’s actions constitute bad faith.

Keep Detailed Records

Maintain thorough records of all communications, including emails, letters, phone calls, and important documents related to your claim. These records will serve as evidence in case of a dispute.

Attempt Negotiation

Try to resolve the issue through direct communication with your insurer, agent, or representative. So, if negotiation fails to produce a satisfactory outcome, consider seeking legal advice.

Mediation or Arbitration

If negotiation efforts are unsuccessful, mediation or arbitration may be viable options. A neutral third party can facilitate discussions between you and the insurer to resolve the matter outside court.

File a Complaint

If the insurer continues to mismanage your claim, consider filing a complaint with your state’s Department of Insurance. Therefore, they can investigate the matter and assist in resolving disputes.

Consult with a Lawyer

If negotiation, mediation, or arbitration do not lead to a resolution, consult with a lawyer experienced in handling a bad faith insurance claim. In addition to assessing your case, they will advise you on your legal options, and represent you in court if necessary.

Consult With Experienced Lawyers at Adamson Ahdoot

Dealing with an insurer that disregards your best interests can be incredibly frustrating. If you suspect your insurance company is acting in bad faith, contact our experienced attorneys at Adamson Ahdoot.

Our team of knowledgeable legal professionals is dedicated to proving your claim and securing the fair compensation you’re entitled to. An experienced attorney will guide you through your legal options, ensuring your rights are safeguarded throughout the process.

Contact us at (800) 310-1606 today to arrange your complimentary consultation with a top-tier injury attorney.