Insurance Bad Faith: Protecting Policyholders from Unfair Practices

Insurance is a safety net for individuals and businesses designed to provide financial relief during challenging times. However, not all insurance experiences go smoothly. When insurance companies act in bad faith towards their policyholders, it can create significant stress, mental anguish, and financial hardship. Understanding these issues can help you protect your rights and navigate the claims process more effectively.

What Constitutes Insurance Bad Faith?

Insurance bad faith occurs when an insurance company fails to uphold its duty to act honestly and fairly in dealing with its policyholders. This obligation is known as the “implied covenant of good faith and fair dealing.” Examples of bad faith practices include:

1. Denying a Valid Claim: The insurer rejects a legitimate claim without a reasonable explanation or investigation.
2. Delaying Payment Unreasonably: Taking excessive time to process and settle claims without reasonable justification.
3. Offering Unreasonably Low Settlements: Proposing payments far below what the policy coverage states or the circumstances warrant.
4. Misrepresenting Policy Terms: Providing misleading information about coverage, exclusions, or claim requirements in order to induce an individual or business to purchase the policy.
5. Failing to Investigate a Claim Properly: Conducting an inadequate or biased investigation to avoid paying the claim.

Steps to Take if You Suspect Insurance Bad Faith 

If you suspect you’re a victim of bad faith practices by the insurer or adjuster, taking the following steps can help protect your interests:

1. Document Everything: Keep detailed records of all communications, documents, and claims-related correspondence with your insurer or adjuster. Keep in mind that every conversation is being recorded by the insurance company.
2. Request Written Explanations: If your claim is denied or being delayed after you have provided everything the insurer or adjuster has asked for, request a written explanation for the denial or delay. This written explanation can serve as evidence if the claim later turns into a case..
3. Consult Your Policy: Review your insurance policy carefully to ensure you understand your rights, coverage, and obligations. A copy of your entire policy can be requested from your Insurance Agent or the adjuster. Keep in mind that most local agents are not involved in the claims process after it is reported and an adjuster is assigned.
4. Seek Legal Advice If Your Claim Is Denied: Contact an experienced attorney to review your case and explore legal options, including filing a lawsuit for bad faith. Typically, legal action cannot be taken until after the insurer makes a coverage decision adverse to the insured, in other words, a denial.

How Gilmore Law Firm Can Help

At Gilmore Law Firm, we understand how devastating insurance bad faith can be. Our team is dedicated to protecting policyholders and holding insurance companies accountable. Whether you’ve been denied a claim or suspect unfair treatment, we’re here to fight for your rights.

Contact us today to schedule a consultation and get the support you need.