The law requires that insurers handle insurance claims in good faith. This ultimately means conducting a proper investigation and providing reasonable payouts in a timely manner, when needed. When that doesn’t happen, it is considered working in bad faith. Here are 6 examples of what that looks like.
1. Failure to Complete an Insurance Investigation
When an insurance company fails to complete an investigation or handles it negligently, you may be denied your insurance claim. The law requires insurance companies to conduct a complete investigation; otherwise is acting in bad faith and it is liable for legal action.
2. Refusal to Pay a Valid Claim
There are certain instances when an insurance company may refuse to pay out a claim that is seemingly in line with their policy. For example, if you incur a serious injury that is expected to heal within six months or more, but your claim is denied despite having long-term disability insurance.
After completing the investigation, the company should send a formal letter specifying the reasons for denying the claim. It should also include the policy section that backs up the refusal, as well as contact information in case you have any additional facts that need to be considered.
3. Deceptive Practices
Another example of bad faith is exercising deceptive practices. For instance, if the company fails to mention an important state law that affects your claim, fails to provide appropriate paperwork or inform you of a deadline, or conceals the existence of another coverage you are not aware of, this is acting in bad faith.
4. Improper Representation of the Law or Policy Language
You are entitled to an explanation when a seemingly legitimate claim is inexplicably turned down. When the company says that your policy does not cover a particular claim when it evidently does, then that is misrepresenting the policy language. It is common for insurance companies to deliberately misinterpret their own policy language in their favor or actually ignore laws that favor the client, so contact an experienced attorney if you suspect foul play.
5. Unreasonable Delays
An insurance company can intentionally delay your payment for their own benefit. For example, they may conspire to push your payout to a later date in order to earn more interest on the money. This could cost you additional money if you have to pay out of pocket for expenses that should have been covered by the insurance company.
Insurance companies use various tactics to delay payouts as long as possible. As they are looking to deny you the claim, they may insist that you see a particular doctor of their choosing, ask you to provide unnecessary supporting evidence, or blatantly accuse you of fraud. If the insurance company does not deny your claim, they should not simply delay your payment.
6. Underpaying a Legitimate Claim
Some insurers may try to underpay your claim if they are unable to deny it in the first place. For example, offering a considerably lower payment than the estimated cost of your medical treatment. Most policyholders throw a fit if their valid claims are denied, so insurance companies have learned that it is much easier to simply lowball their clients’ claims. Doing this is acting in bad faith, plain and simple, and it is against the law.
Unfortunately, insurers do not always fulfill their duty to act in good faith as required by the law. If you believe that your insurance company has been acting in bad faith, you need to consult Ryan R. Cox & Associates, LLC immediately to discuss your options. Get in touch now at 636-946-6886.