In Bad Faith: Examples of Deceptive Practices and Unlawful Tactics
Without insurance, you leave yourself open to the unexpected. It's a lot easier to pay a modest monthly premium than to go out of pocket tens of thousands of dollars in the event of an unexpected incident. We rely on insurance to protect us and compensate us when the unexpected occurs. However, not all insurance companies and agents act in good faith. Without sufficient experience in dealing with insurance companies and their agents, it is easy to fall prey to dishonest and deceptive schemes. With an overabundance of competitive insurance companies to choose from, more than one on occasion have been caught using what is known as "bad faith" practices.
Some companies and agents have been known to work against its policyholders to protect its profits, leading to a rise in the need of attorneys that specialize in dealing with situations in which a policyholder has been denied fair payment of a legitimate claim. There are dozens of examples of unlawful and bad faith dealings that real people have experienced. Even well-known companies such as Allstate, AIG, State Farm, and Farmers Insurance have been accused of placing their profits over their policyholders and acting in bad faith. How can you know if your insurance company is acting in bad faith? Here are some of the most common "bad faith" practices that you should be on the lookout for:
- The insurance company may take an unreasonable amount of time to start working on your claim or carry out an investigation into the damages.
When an insurance company takes an unreasonable amount of time to investigate the claim in the hopes that the policyholder will eventually stop seeking payment for damages, they are operating in "bad faith." This is typically the reason why strict limits are set on the amount of time an insurance company can take to investigate and accept or deny said claims. In the state of Texas, for example, insurance companies have 48 hours to inform you of the receipt of your claim, and up to 15 days to make a decision on whether or not to approve or deny the claim with good reason.
- The insurance company does not conduct a thorough investigation into the damages.
An insurance investigator should do a thorough evaluation of the claim, including requesting additional documentation if necessary. They should always investigate the damage, look at repair receipts or estimates, and inspect the damage in person if needed. They may even look into the backgrounds of witnesses, claimants, medical professionals, police, or anyone else who was involved in the claim. The insurance company should never deny a claim without doing thorough investigation and providing a clear reason as to why the claim, or part of the claim, was denied.
- The insurance company may try to assert that you are at fault.
Insurance companies have been known to try anything they can to avoid paying a claim, especially if the claim runs a high price tag. In the case of Thomas J. Ivers vs. Allstate Insurance Company, the plaintiff was denied coverage due to Allstate's assertion that he had set the fire to his home himself as an act of arson. The jury ultimately ruled in favor of the plaintiff and he was awarded the damages. Another case entitled
Farmers Insurance vs. Lueverda Adams, led to public outcry over it's assertion that a 60 year old woman named Ethel in Washington State caused her own devastating accident. Ethel was in a motor vehicle crash when a pickup truck hit her Hyundai Accent head on, leaving her in a coma for nine days and confined to a wheelchair. Even though she had $2 million worth of coverage, they refused to pay, asserting that Ethel was acting in a case of road rage that ultimately caused the crash.
- The insurance company might knowingly misrepresent the law or language of the policy to deceive you.
It certainly isn't easy to read legal documents. In fact, you should never feel guilty about asking them to explain something that you don't understand. You can ask that the agents clarify every paragraph in your policy so you fully understand the ins and outs of what you're signing up for. What would be considered "bad faith," however, is when an insurance agent knowingly misrepresents the policy or the language in the policy in order to deceive you. For example, they could claim that you can be found guilty of fraud if you submit a claim that is missing information, or that you'll go to jail if you're not one hundred percent sure that every single detail of your claim is correct. They can also claim that hiring an attorney will invalidate your policy or cause a severe delay in your ability to receive your money quickly.
- They can try to pay you less than what you deserve for your claim.
Insurance companies have tried time and again to settle payments for less than what is fair to the policyholder. You may be in a rush, or need the money quickly to repair the damages and get back home, and some companies and their agents may not be above trying to exploit this fact. The agents may try to settle for a lot less than what you should be receiving, then tell you that recalculating that number will cause a longer delay in you getting the money you're owed.
These are not the only tactics known to be used by insurance companies that can be considered "bad faith" practices. If you've been a victim of bad faith practices, you can file a bad faith claim against the company with the help of an experienced insurance attorney. These types of claims can be filed for any type of insurance, such as property or homeowner's insurance, health and life insurance, and automobile insurance. A consultation with an attorney could help you decide if the company is acting in bad faith, and whether or not pursuing that company for damages is the next best step in the process. They can also walk you through what to expect.