You pay your premiums every month on time with the expectation your insurance company will be there when you need them. When you need to file a claim, you’re not expecting a drawn-out or challenging process.
You expect your insurance company to follow ethical practices, unfortunately, this isn’t always the case. Some insurance providers use shady tactics to delay or deny your claim. To help counteract these bad practices, here’s what to know about bad faith insurance claims.
What are Bad Faith Insurance Claims?
Bad faith insurance refers to a provider’s attempts to get out of paying a client’s claim. The client is in good standing with the insurance company, their claim is legitimate, and the provider is refusing to review and process the claim.
An insurance company is considered to be acting in bad faith when it tries to misrepresent policy terms and conditions. Failing to disclose policy caps or exclusions to the client before they purchase the insurance is another example of bad faith practices.
While the majority of insurance providers follow ethical guidelines, it doesn’t apply to all. If you suspect your insurance company is acting in bad faith, it may be time to contact an attorney. You should also get in touch with the insurance company. Sometimes, an adjuster is acting in bad faith without the company’s knowledge.
Steps for Filing a Bad Faith Insurance Claim
If your insurance provider is unreasonably delaying processing your legitimate claim or outright denies it, there’s a chance they may be acting in bad faith. So, what are your legal options? Are you stuck waiting for a response or with the denial?
If your claim is legitimate and falls under your policy’s coverage, you may be able to file an insurance bad faith lawsuit. This is when you file a lawsuit against the insurance company in civil court.
However, before you and your attorney head to the courthouse, you should follow a few steps. These steps can help ensure you’re ready to successfully bring a lawsuit against your insurance provider.
Review Your Insurance Policy
Before you move on to filing a lawsuit, read your insurance policy, and this includes reviewing the fine print. You know the sections pretty much everyone ignores. The fine print may contain exclusions or other policy limitations.
If the contract’s fine print excludes your claim, you may not be out of legal options. Remember, bad faith acts include failing to disclose all policy limitations. If the insurance agent didn’t cover these points before selling you the policy, it may be considered bad faith.
Make Copies and Save Everything
To file a bad faith lawsuit against an insurance company, you’re going to need plenty of proof. Along with a copy of your insurance policy, you need to provide proof of the insurance provider’s bad-faith actions.
Save copies of all texts and emails concerning your claim between yourself and the insurance company. You should also be receiving documents from the insurance company relating to the status of your claim.
Even if the documents only notify you the claim is still under review, add the paperwork to your file. Chances are, you’ll have phone calls between yourself and an insurance adjuster. Jot down notes detailing the discussion, but don’t record the conversation.
It can be tempting to record your conversations, but it’s usually not a good idea depending on where you’re from. While some states have one-way recording laws, most don’t, and this means you need the insurance adjuster’s consent to hit the record button.
Another reason you probably don’t want to record your discussions is the insurance company can use your words against you in the lawsuit. Just stick to keeping notes that include the date and time of the calls.
Other documents you want to have on hand relate to your initial insurance claim, which typically includes your medical records and other bills and receipts for additional damages.
List the Bad Faith Conduct
You need to have a reason to file a lawsuit against an insurance company. Along with your lawsuit, the insurance company may also face industry fines and other penalties which often vary by state. While we covered a few examples of bad faith insurance practices earlier, here’s a more extensive list:
- Failure to investigate a claim or explain the reason for a denial
- Failure to settle one portion of a claim to influence settlement on another part of a claim
- Trying to settle for an amount that doesn’t reflect the actual value of the claim
- Requiring a policyholder to undergo unnecessary medical testing
If your insurance provider is continually sending you unreasonable document requests, this may be an attempt to deter you from continuing to pursue a claim. Once you can list the bad faith conduct, you can usually move forward with your lawsuit.
Appealing a Claim Denial
Usually, signaling you’re ready to file a lawsuit based on bad faith insurance tactics, the provider is ready to sit down and start processing your claim. However, if your claim is denied, you’re probably going to need to go through the appeal process. An appeal is also necessary if the insurance company refuses to budge from a lowball offer.
You can ask the insurance company to review your claim. You’re probably going to need to resubmit your original documentation along with the reason you believe the offer is too low or why the claim should be approved. If this doesn’t bring about a successful resolution, you can file a bad faith lawsuit against the insurance company.
Don’t Accept Bad Faith Insurance Practices
If your insurance company is acting in bad faith, you have different legal options available to you. You can file an appeal with the insurance company.
Hopefully, your issue is only an internal mistake or miscalculation. Sure, the appeals process can take some time but it can also help ensure you eventually receive fair compensation. Your other legal option is filing a lawsuit against the insurance provider in court.
When you’re dealing with an insurance company and suspect bad faith tactics, don’t go through the process alone. Talk to an attorney to learn more about your legal options.
