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Is a long claim processing delay a form of bad faith insurance?

On Behalf of | Jul 5, 2022 | Homeowner's Insurance Matters |

If you have a mortgage on your home, the bank typically requires that you have a homeowner’s insurance policy. Even if you already own your home and owe no money on it, you probably carry homeowner’s insurance to protect you against losses and possible financial liability.

The average Alabama homeowner may never require that insurance coverage, but those who become victims of crime, who experience inclement weather or who have an unexpected accident at their property may eventually make large claims.

When you need to rebuild your house or reimburse someone who got hurt on your property for medical costs, you want to resolve those matters as quickly as possible. Can the insurance company leave you waiting indefinitely on a large claim, or are such actions a kind of bad faith insurance?

A timely response is required by law

Alabama does not leave the timing of an insurance claim to the company’s discretion. The businesses underwriting policies that protect people in Alabama must comply with state law regarding turnaround time for claims. Specifically, they have 15 days from when you notify them of the claim to confirm that they received your communication and provide you with any paperwork or instructions necessary to move forward.

Once you submit any additional paperwork, like proof-of-loss forms, the insurance company will have 30 days to approve or deny your claim. After approving your claim, they will then have another 30 days to settle the claim fully by paying you the promised amount. When insurance companies deviate from this statutory timeline, they open themselves up to bad faith insurance claims and possibly civil litigation.

Having support can help

Insurance companies often have the upper hand when negotiating with individuals, but they may be more professional, responsive and cautious when they know that a policyholder has an attorney representing them.

Working with a lawyer helps ensure that you handle the paperwork properly and know your rights. It will also help advise the insurance company about how seriously you take the matter. If you do have to go to court, you will have someone capable of discussing the matter on your behalf and also helping you navigate a complex legal system. Knowing the rules that apply to homeowner’s insurance claims in Alabama can help you hold the company responsible when they don’t comply with the law.