Bad Faith Insurance Claims: 4 Things You Should Know About Them

When you buy an insurance policy, you will expect to get coverage when you encounter something like an auto accident, wrongful death, or property damage. The reason for paying monthly premiums is to file a claim and get the money needed for repairs, loss of income, and medical bills. However, insurance companies are in business, and they may act in bad faith or renege on their obligations to pay the policyholder’s claim in a bid to protect their interests. To deal with this issue, there are different measures you can take. Here are 4 things you should know about bad faith insurance claims.

  1. Understanding Bad Faith Insurance Claims

Bad faith insurance claim refers to the tactics often used by some insurance companies to avoid fulfilling their contractual obligations to the policyholders. For example, insurance providers can misrepresent contract terms, nondisclosure of crucial policy provisions like limitations and exclusions to avoid paying claims. If an insurance provider fails to explain all the terms to the policyholder, the practice amounts to acting in bad faith. It can apply to any type of policy including auto insurance, health insurance, life insurance, homeowner’s insurance, or any other form of contract.

In some instances, insurance companies can look for counter-evidence they can use as the basis for denying a claim. Insurers must explain the reasons for their refusal to cover the claim. Additionally, if your insurer fails to respond to a policyholder’s claim, it is considered an act of bad faith. However, you should understand that a genuine mistake cannot be treated as bad faith. If the insurer is willing to rectify the error identified, then there is no reason for panicking or raising a red flag. 

  1. Hire a Lawyer

If you feel that your insurance company has acted in bad faith after filing a claim, you should seek legal advice from a lawyer who specializes in these cases. It is vital to review the details of your policy to be certain that your provider has failed to meet its responsibilities. Experienced bad faith attorneys at explain that you can get peace of mind if you enlist the services of professional legal practitioners. Dedicated lawyers often put extra effort into helping accident victims and people who have been ripped off by their insurance companies in many ways. They dig deeper to get to the bottom of the issue.  

Your attorney will investigate the case and gather all the necessary evidence before they prepare a strong claim to your insurer. They can also help you get quality treatment so you can quickly recover. Another advantage of dealing with a lawyer is that they can negotiate with your insurance company for the ideal settlement you deserve. Your attorney can also file a lawsuit if the offer by the responsible party is unreasonable.  

  1. Don’t be Forced to Sign Documents

There are many things that your insurance company doesn’t want you to know. They often encourage their adjusters to maximize profits and often misrepresent some information to underpay the claimants. In most cases, insurance companies create low compensation offers to increase their profit margins at the expense of the clients. They can also misrepresent your injuries by claiming that they are not serious and don’t deserve to be compensated. Insurance companies can also delay settlements, which will force you into an expensive court battle. 

The other technique that can be used by an insurance company is to pressure you to provide a recorded statement or sign an agreement. It’s your legal right to refuse to sign anything against your wishes. Make sure you sign all the documents in the presence of your lawyer. Once you sign anything against your wishes, it becomes difficult to reverse it. 

  1. State Laws and Bad Faith

There are state laws that are designed to protect the interests of the consumers and address bad faith insurance claims. You should know that some laws require the companies that deliberately fail to meet their contractual obligations to pay compensation to the victim and punitive damages. The settlement will cover attorney’s fees, missed work, and out-of-pocket expenses incurred in pursuit of the denied claim. The jury may award the policyholder the punitive damages to deter the would-be offenders. If your company makes a mistake, it is exempted from the punitive damages.

Different tactics can be used by insurance companies which can be classified as bad faith. If your provider fails to meet its obligations, you need to consult an experienced insurance lawyer to help protect your rights. Many insurance companies act in bad faith to maximize profits and protect their business interests.