Insurance companies provide financial protection against potential risks and losses. There are several types of insurance, ranging from motor vehicle insurance to health insurance and life insurance.
However, not all insurance companies make good on their promises. When an insurance company refuses to pay a client’s claim within a reasonable period, it’s called a bad faith practice.
If you’re having trouble getting a payout from an insurance provider, bad faith claim lawyers can help you fight your case.
Do insurance companies really work in bad faith?
Insurance companies are primarily businesses built to generate profit. So, they regularly employ tactics to reduce or avoid paying out their clients. Some commonly used tactics are outlined below:
Refusing to investigate
Sometimes, insurance companies refuse to investigate a valid claim.
Say you were in a car accident and filed for a claim, but the insurance provider denied your claim on call without an investigation. This is an example of bad faith practice.
Delaying the investigation
Insurance companies may delay investigating the claim without proper explanation. Say the insurance provider takes a month or two to investigate your claim without reason; it is considered bad faith practice.
Not paying the full amount
Insurance providers may try to get away with paying the client less than the actual amount they’re owed.
Say you’re owed $15,000 for a car accident, but the company only offers $10,000, it is in bad faith.
Refusing to pay
Insurance companies may, sometimes, refuse to outright pay the policyholder.
Say you have to undergo an expensive surgery that is covered by your insurance policy, but they reject your claim citing various reasons. This is also an example of bad faith practices.
Delay in payments
Insurance companies sometimes delay payments without an explanation.
If it’s been months since you filed a claim, and you still haven’t received a payout from your insurance provider or any communication about the cause, then it is considered an act of bad faith.
Other tactics
There are other practices insurance companies follow to avoid payouts deliberately. Here are some of them:
- Using confusing language in policy documents
- Incorrectly representing policy information to the client
- Not providing information on how to file the relevant documents
- Not providing satisfactory explanations for delays or denials
Steps to take if you’ve been the victim of bad faith practices
Consumers are protected from bad faith practices by a set of laws. This can vary from state to state, such as California’s Unfair Claims Practices Act.
If you’ve been the victim of bad faith practices, you are entitled to file a lawsuit against your insurance provider. Here are the steps you should follow:
Check your insurance policy
Ensure you carefully read your insurance policy and understand the terms and conditions. Your claims should be covered by your insurance.
Keep detailed records
Keep detailed records of all relevant documents and your communication with the insurance company. This will help you prove bad faith and file a lawsuit.
Seek legal advice
If you have good cause to file a claim and your provider refuses to pay, it is advisable to seek legal counsel. This is because you are required to prove your claim and the insurance company’s bad faith practices. This can get quite complicated, especially when dealing with a team of lawyers from the insurance company.
It is not a hoax that insurance companies work in bad faith. Be aware of such practices and lawyer up!
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