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How to tell when an insurance company is acting in bad faith

On Behalf of | Aug 24, 2021 | Civil Litigation |

After a motor vehicle collision, a tree falling across a rooftop or a water heater failing and flooding the home, individuals first look to their insurance policies for help. Unfortunately, the insurance carrier has goals and motivations that might run contrary to what’s in their customer’s best interests. This conflict is often called “insurance bad faith.”

When an insurance company does not honor the terms of their policy after a catastrophic event, they have acted in bad faith. In general, this means the carrier has denied, devalued or delayed the insurance claim without performing their due diligence. If the company dismisses or disregards the claim without a proper, objective investigation, they have not upheld their end of the bargain, as it were.

There are several actions that might be warning signs for claimants, including:

  • Unreasonable documentation requests: Some insurance carriers might employ a tactic in which documentation requests might be unreasonable or unnecessary in the scope of the investigation. They might strive to complicate the overall process leading to either a delay or a misstep on the part of the insured that could lead to a reduction in value or a claim denial.
  • Low settlement: The insurance company might offer a quick, lowball settlement to finalize the claim rather than perform a thorough investigation of the matter.
  • Lack of proper investigation: The insurance carrier must perform a thorough investigation into your claim. The company might fail to complete the investigation in a reasonable amount of time, delay the assessment numerous times or remain silent throughout. The lack of a proper investigation is a red flag that the insurance company is acting in bad faith.

Consumers hope their insurance carrier upholds their obligations after a medical or environmental disaster so they can prevent financial peril. Unfortunately, many forget that an insurance company is still a business that must be careful of its bottom line. When the carrier’s financial concerns outweigh their customer obligations, the company could be said to have acted in bad faith. It is wise to take steps to protect yourself.