3 Signs of a Bad Faith Insurer
Brian White | May 22, 2018 | Insurance Bad Faith
The law obligates insurance companies to handle claims and policyholders with good faith. Unfortunately, not all insurers take the duty of good faith seriously. Some try to unfairly deny or delay claims to save money. It is for this reason that bad faith insurance claims exist – to enable claimants to fight back against negligent insurance companies. In a bad faith claim, you could receive greater compensation than the original value of your claim. Use these three signs to recognize a bad faith insurer and to know when to take legal action.
Lack of a Reasonable Explanation for a Denial
Federal laws require all insurers to notify claimants if they deny claims. These notifications must include an explanation for the denial. Lack of an explanation altogether could be grounds for a bad faith claim, but this does not happen very often. Instead, insurance companies will give reasons that aim to exploit loopholes or confusing legal jargon in your insurance contract. For example, an insurance company may deny flood damage by calling it “wind-driven rain” and reference a clause in your contract that’s several pages long.
If you cannot make out the specifics of a provision in your insurance policy on your own, trust a Houston injury attorney to do so for you. Unlike the insurance company, an attorney wants you to recover the maximum amount possible for your damages. Have a lawyer review your contract and the letter that explains the denial. You might have a bad faith claim if the reason does not make sense for your situation, or if you disagree with the company’s logic.
Unnecessary Delays in Processing Your Claim or Payment
Another way an insurance company might be guilty of bad faith is if it intentionally draws out the claims process to delay paying policyholders. A good faith insurer will take prompt action to speak with you, investigate your accident, and come to a conclusion about your claim. If an insurance company continuously puts off an accident investigation, makes you jump through hoops to file a claim, keeps passing your case to different adjusters, or simply refuses to pay your settlement, contact an attorney
A bad-faith insurer might delay the investigation process in an effort to deny you recovery for damages. For example, say your house burned down but the insurance company takes a month to visit the location and assess the damages. In that time, it’s rained and you now have fire and flood damage. The insurance company tries to offer you less for your claim because you failed to prevent further damage to your home after the fire. This could be an example of insurance bad faith, because if the insurer had acted promptly, the flood damage might not have occurred. Asking for too much paperwork or documentation is another bad-faith tactic meant to delay your claim.
Absurdly Low Settlement Offer
Insurance companies are notorious for offering less than a claim is actually worth. Always seek a second opinion from a trustworthy attorney before saying yes to a settlement offer. It may surprise you to find the initial amount is much less than a lawyer believes you could get through negotiations or a personal injury claim. Often, retaining an attorney will immediately result in a higher settlement award, as the insurance company knows you have the power to take your claim to court, if necessary.
Do not say yes to your first settlement offer unless you’ve spoken to a lawyer who gives his or her professional approval. Saying yes, even during an over-the-phone conversation with an adjuster, is a legally binding agreement with the insurance company. It may be difficult or impossible to get more for your claim after you’ve accepted the initial offer. Protect yourself from lowball settlement awards and insurance bad faith by retaining a personal injury attorney in Texas.