In some cases, carrying certain types of insurance is mandatory. Homeowners with mortgages generally need to have coverage that complies with their lenders’ requirements, for example. Other times, insurance is a smart investment. It can help a property owner protect against weather-related damage and personal liability.
People who have paid thousands of dollars for insurance coverage usually expect friendly support from their insurance providers if they need to file a claim. Unfortunately, that isn’t always what happens. Some people end up fighting with their insurance providers when they need to make use of their coverage.
In some cases, difficult insurance claims actually constitute bad faith insurance practices. Insurance companies have an obligation to uphold their policies in good faith. The failure to do so could leave them vulnerable to lawsuits.
What constitutes bad faith insurance practices related to a claim?
Lying about coverage
Some insurance professionals try to convince policyholders that they don’t have a valid claim. They may try to trick people into giving up their right to compensation by insisting that a loss does not fall under the scope of their policy.
Retroactively changing the policy
Sometimes, insurance professionals try to manipulate people by passing additional expenses on to them when they file a claim. Insurance companies cannot increase the deductible in the middle of a claim or otherwise alter a policy after the consumer purchases it. Such changes typically only occur at renewal time.
Delaying claim resolution
Instead of openly denying a claim, some insurance professionals try to make the claim process as inconvenient as possible. They might drag the process out for weeks in the hopes that the policyholder becomes frustrated and ceases trying to obtain the coverage they deserve.
Making low settlement offers
Upholding a policy in good faith involves not just acknowledging the terms of the policy but also the losses of the policyholder. Some professionals offer settlements that are far below the total expenses generated and then refuse to cover any additional losses.
Insurance companies have a legal obligation to uphold their policies in good faith. When they refuse to do so, policyholders and others filing legitimate claims may need to take them to court. Insurance litigation can potentially lead to appropriate compensation and possibly also additional damages imposed by the courts for bad faith insurance practices. Reviewing the conduct of an insurance company with a skilled legal team can help people identify whether a company may have acted in bad faith.