Insurance is meant to protect you by providing financial coverage when you need it most. Whether it's a car insurance, life insurance, or property insurance policy, you expect that it will come through in your time of need so that you can begin to recover and heal. When an insurance company fails to meet its obligation to you, your recovery can be derailed. Not only is this situation disheartening and infuriating – it's illegal. An insurance policy is a contract between you and the provider. When the provider doesn't uphold their end of the bargain, they're operating in bad faith. In this blog, we'll define bad faith insurance and discuss the signs to look out for when it comes to your insurance claim.
If your insurance company has engaged in any of the following tactics, contact our insurance lawyer in Utah today. We'll stand up for you so that you can begin to heal.
What Is Bad Faith Insurance?
Bad faith insurance refers to a cause of action brought against an insurance company for breaching its duty to act in good faith when settling a claim with its insured customer. An insurance policy is a legally binding contract between you and an insurance provider. By law, providers have a duty to act in good faith, meaning they cannot engage in fraudulent, unethical, misleading, or dishonest practices when it comes to settling a claim. Claimants have a right to take legal action against the insurance company for engaging in bad faith practices. Insurance bad faith may apply to a variety of insurance types, including auto insurance, health, property, and life insurance policies.
What Are the Signs of Bad Faith Insurance?
Not all claim denials or delays are a result of bad faith insurance practices. Your insurance company does have a right to deny your claim in some situations. For example, if the insured has not fulfilled his or her obligations according to the policy (example: failing to pay premiums) or if the policy's coverage does not extend to a specific claim, the carrier does not have to accept and pay the claim. However, it's important to establish if a claim has been fairly denied. If your insurance claim has been denied, the first step is understanding the reason for the denial. Under Utah law, an insurance provider must provide a reasonable explanation of the basis of denial. Utah Code § 31A-26-303. After you know the reason for the claim denial, if you suspect that it has been unreasonably denied, contact our insurance lawyer. A lawyer will help you with the proper next steps. Sometimes claims may be denied for simple reasons, such as an error on a form or a filing mistake. A lawyer can help you with an insurance claim appeal or identify bad faith practices like the ones discussed below.
A Legitimate Claim Was Denied
If the reason for your claim denial doesn't make sense or was never provided, it's a big sign that your insurance company may be operating in bad faith. Note that sometimes providers will give complicated reasons for claim denial in hopes that you'll drop it and move on. They may highlight a complex section within your policy as the reason for the denied claim or completely misrepresent the facts of your case. If your claim has been rejected by the insurance company, it's a good idea to review your policy with an experienced insurance lawyer. Don't just accept the denied claim. If it seems fishy, it probably is.
Your Claim Hasn't Been Investigated
Another huge tactic that insurance companies utilize is avoiding an investigation or conducting a superficial, inadequate investigation. If it seems like an insurance adjuster is just “checking boxes,” that may be the case. During an investigation, the insurance company should be conducting a thorough review of the claim, reviewing the policy, medical records, policy payments, etc. They should also be following up with you in a timely manner. Some signs that a proper investigation is not taking place are:
- Not completing an assessment in a reasonable timeframe
- Continuous delays or failing to communicate about the investigation
- Lack of scrutiny when it comes to your claim
- Failing to communicate with relevant parties
Any delays in the investigation of the claim without reasonable cause is a sign that the insurer is attempting to underpay your claim or deny it completely.
The Process Is Taking Too Long
An insurance company doesn't want to pay you. If they do pay you, they want the settlement to be as small as possible. Often insurance companies attempt to delay a payout because unpaid money accrues interest. Once the money has been paid, it's no longer turning a profit for the insurance company. You deserve a timely settlement. Not getting one is a sign of bad faith insurance. Some typical delay tactics insurance companies use include:
- Delaying your payment
- Delaying payment within policy limits to others who have been injured
- Exposing you to liability in excess of the amounts of your policy limits
- Requesting unreasonable and unnecessary documentation
- Failing to communicate with you in a timely manner
Another reason for delays is that the insurance company is hoping you or those you are liable to will get desperate. Typically, desperate claimants will settle for a lot less money. Insurance companies know if they drag out the process, people are more likely to take whatever amount they are offered. If you've suffered from insurance delays or have been offered a lowball settlement, don't take less than what you deserve. You deserve good faith practices – you're legally entitled to them! You also deserve compensation that will help make you whole again. Don't accept a low settlement out of desperation. Call our insurance lawyer at Andrus Law Firm. We will fight to protect your interests.
Attempting to Use Your Policy Against You
Another common effort by the insurance provider to delay or deny your insurance claim is using your policy or the law against you. There are several ways a carrier may do this, including:
- Canceling your policy - This is a common bad faith behavior for insurance companies. To avoid paying your claim, they will search for reasons to void a policy. Something as small as one unsigned form, or a misspelled name could result in an insurance company attempting to cancel the policy entirely. They may even make changes to your policy in an attempt to do this. Insurance lawyer tip: Always keep a copy of your original policy.
- Claiming your policy has lapsed - Unfortunately, if someone has been in an accident or suffered from a prolonged illness, they may have neglected to pay their policy for a few months. Even if they have paid their policy on time for 30 years, the insurance company may claim that their policy has lapsed.
- Misinterpreting language within your policy - Insurance policies are written in complicated language that people outside of the industry don't use on a daily basis. This provides a lot of space for bad faith tactics to creep in. A provider may highlight a certain section with particularly complicated language as the reason for your claim denial. They may completely misrepresent a relevant section within your policy or state that your claim includes certain exclusions in an effort not to pay you. It's a good idea to have an insurance lawyer review your policy with you, especially if the insurance company is using specific language as an excuse to deny your claim.
Call an Accident Lawyer in Utah Today
Insurance is supposed to be there as a safety net for you. For many people, insurance serves as the only means to take back their life or recover from a life-altering accident. Don't let bad faith insurance practices keep you from emotional, physical, or financial recovery. Our insurance lawyer in Utah is here to help you. We'll be there every step of the way to ensure that you get the compensation you need and deserve. Don't wait another second if you believe the insurance company is breaching its duty to you. Call us at 801-535-4645, or fill out our convenient and confidential online form to set up an initial consultation.