Insurance is all but mandatory in certain instances, such as if you wish to drive a car in California or if you carry a mortgage on your home, and is seen as a necessity for things like health. And while it’s certainly true that as much as most people would prefer not to have to pay for insurance, they absolutely never want to have to access the benefits of insurance by needing to file a claim. But when they do, they want their insurance company to be there for them. Unfortunately, that is not always the case.
Insurance is a unique type of business in the sense that it is very much self-regulating. An insurance company will offer coverage for protected losses, and it is the main, and often sole, arbiter over whether the loss claimed by the policyholder is covered by terms of the policy and if so, to what extent. Considering that an insurance company is ultimately a for-profit business that very much wants to keep shareholders happy by increasing their bottom line, it is easy to see where there may be potential conflicts of interest. Legal commentators indicate that when an insurance company fails to perform its obligations properly, it may be an act of bad faith.
Examples of improper insurance company actions include unreasonable delays, incomplete investigations, deceptive practices, refusing to pay on a valid claim, offering less than the full amount of what a claim is worth, misrepresenting what the policy language actually says and threatening the claimant. Each of these actions is designed to either make the claimant reluctant to pursue the matter and drop the claim or settle for less than the claim is worth.
There are, however, remedies for an insurance company’s bad faith actions. An attorney experienced in insurance law might evaluate a case to determine potential problems with its adjudication.