People who pay for homeowners insurance and other types of coverage generally expect support if emergencies occur. Some people invest in robust policies specifically because they worry about the financial implications of a personal emergency or an incident that results in liability.
Unfortunately, insurance companies do not always uphold their policies in good faith as they should. They may engage in bad faith insurance practices that deprive policyholders of the coverage that they purchased. Bad faith insurance practices may lead to litigation. The courts can uphold the policy and even impose a penalty on the insurance company.
What are some of the most common types of bad faith insurance practices?
Denying valid claims
Insurance professionals sometimes find flimsy excuses to justify refusing to cover a loss. They may reject valid and reasonable claims, leaving policyholders with few options other than pursuing litigation.
Delaying claim payout
In some cases, insurance professionals drag out the claims evaluation or payment process. They hope to frustrate clients into giving up instead of continuing to pursue the claim.
Offering low settlements
A settlement provides the policyholder with immediate capital to cover certain expenses. It also protects the company from liability. When the settlement is unreasonably low given the current and likely future costs the policyholder faces, they may have grounds to claim that they experienced bad faith insurance due to the inappropriate settlement amount.
Recognizing and fighting back against bad faith insurance practices can help policyholders get the coverage they deserve. People should not be at the mercy of insurance companies that do not have their best interests at heart.
