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Recognizing signs of bad faith for insurance policyholders

On Behalf of | May 9, 2024 | Insurance Law

Insurance policies should provide peace of mind and financial protection in times of need. However, some insurance companies may act in bad faith, leaving policyholders vulnerable and at risk.

Recognizing signs of bad faith can help policyholders protect their rights and ensure they receive fair treatment.

Delayed or denied claims

One of the most common signs of bad faith is when an insurance company unreasonably delays or denies a valid claim. If you submit a claim and it takes an excessively long time to process or if the company denies your claim without a clear explanation, these delays or denials could be red flags.

Inadequate investigation

When an insurance company fails to conduct a thorough investigation into a claim, it may be acting in bad faith. This could involve not gathering sufficient evidence, ignoring important facts or dismissing valid documentation you provided.

Lowball settlement offers

Offering an unreasonably low settlement amount is another tactic used by some insurance companies. You should be wary if the settlement offered does not cover the full extent of their losses or if it significantly undervalues their claim.

Misrepresentation or fraud

Insurance companies have a duty to act honestly and transparently with their policyholders. If you suspect that your insurance company misrepresents your policy terms, exaggerates exclusions or engages in fraudulent practices, they may act in bad faith.

Lack of communication

Clear communication is important in the insurance claims process. Consider whether your insurance company responds to your inquiries, keeps you updated on the status of your claim or answers your questions.

If you believe your insurance company is acting in bad faith, document all communication with the insurance company, including letters, emails and phone calls, and take action.