The term “bad faith insurance practices” is one that isn’t discussed very often by the media or by the public generally. This is unfortunate, as understanding what this term means can genuinely empower individuals who have suffered harm and are getting the run-around from insurance companies.
Bad faith insurance practices occur when an insurance company fails to act honestly, fairly or otherwise fails to reasonably handle a claim. Insurance policies serve as contracts that require both sides to uphold certain duties. While policyholders must pay premiums and provide accurate information, insurers are legally obligated to investigate claims promptly, communicate clearly and pay valid claims in a timely manner as a result of these duties and legal expectations. When they fail to do so, it may constitute bad faith. And bad faith practices are often actionable on the part of those who have been wronged.
Common examples of bad faith insurance
One common example of bad faith is the outright denial of a legitimate claim without a reasonable explanation. Insurers may also delay processing a claim unnecessarily, hoping that a policyholder or injury victim with a legitimate related claim will give up or accept a lower settlement. Another tactic involves offering an unreasonably low payout that does not come close to covering the losses at issue, despite clear evidence supporting a higher amount.
Bad faith can also occur when an insurer fails to conduct a proper investigation. This could include ignoring key evidence, refusing to speak with witnesses or not reviewing available documentation. In some cases, the insurance company may misinterpret or misrepresent policy language to justify a denial or underpayment.
These practices can be especially damaging to personal injury victims. A delayed or denied payment can make it harder to get proper medical care or recover financially after an accident. Thankfully, the law exists to protect policyholders from unfair treatment, and pursuing a bad faith claim can potentially help injury victims recover what they are rightfully owed and help to prevent similar misconduct in the future.
