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
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
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.