When you file an insurance claim, you expect the insurance company to handle it fairly and in good faith. However, some insurers engage in unethical practices to delay, undervalue, or deny valid claims. This is known as bad faith insurance, and policyholders have legal rights to challenge such actions.
This guide will help you understand what constitutes bad faith, how to recognize unfair settlement practices, and when legal action may be necessary.
What Is Bad Faith Insurance?
Bad faith insurance occurs when an insurance company fails to uphold its legal duty to act fairly and in good faith when handling claims. This can apply to various types of insurance policies, including auto, homeowners, health, and disability insurance.
Signs of Bad Faith Insurance Practices
Recognizing bad faith practices early can help you take the necessary steps to protect your rights. Some common tactics used by insurance companies include:
- Unreasonable Delays – Insurers intentionally slow down the claims process without a valid reason.
- Denying a Valid Claim Without Explanation – Failure to provide a clear, legal reason for denying a claim.
- Offering Significantly Less Than a Claim is Worth – Insurers may attempt to pressure policyholders into accepting an unreasonably low settlement.
- Failing to Investigate the Claim Properly – Insurance companies are required to conduct thorough and timely investigations.
- Misrepresenting Policy Terms – Insurers may distort policy language to justify denying or underpaying a claim.
- Demanding Excessive Documentation – Requiring unnecessary paperwork to delay or frustrate the claims process.
- Ignoring Communication or Providing Conflicting Information – Failure to respond to inquiries or providing misleading responses to claimants.
When Should You Take Legal Action?
If you suspect that your insurance company is acting in bad faith, consider taking legal action if:
- You have provided all necessary documentation, yet your claim is still delayed or denied.
- The insurance company refuses to negotiate a reasonable settlement.
- You receive conflicting or misleading information regarding your claim.
- You face unjustified delays in communication or resolution.
Steps to Take if You Suspect Bad Faith Insurance
- Document Everything – Keep records of all correspondence with your insurance company, including emails, letters, and phone calls.
- Review Your Insurance Policy – Understand your policy coverage and exclusions to counter any misrepresentations.
- Request a Written Explanation – If your claim is denied, ask for a detailed written explanation from the insurer.
- File a Complaint – Report bad faith practices to the Florida Office of Insurance Regulation or the state’s Department of Insurance.
- Consult an Experienced Attorney – A legal professional can assess your case and guide you through the process of holding the insurer accountable.
How an Attorney Can Help
An experienced insurance claim attorney can assist by:
- Evaluating your claim to determine if bad faith occurred.
- Negotiating directly with the insurance company.
- Filing a lawsuit against the insurer if necessary.
- Ensuring you receive the compensation you are entitled to under your policy.
ECD Law Firm Is Here For You
Insurance companies are required to handle claims fairly and honestly. If you suspect bad faith, it’s essential to take action to protect your rights and seek the compensation you deserve.
For assistance with a bad faith insurance claim, contact Warren Chin and ECD Law today to discuss your case.