Bad Faith Insurance Tactics

Insurance Bad faith is broadly considered to be dishonest dealing, and encompasses a wide range of practices by insurance companies.

These examples of bad faith insurance practices may help you identify whether your insurance company has been acting in bad faith.

Examples of Insurance Bad Faith:

Denying a claim without giving a reason

Insurance companies should always give a reason for claim denials. If your insurance company has denied a valid claim without giving any reason whatsoever, or has denied your claim for an invalid reason, you may have a claim against your insurance company for bad faith. That is why you should contact an insurance bad faith lawyer in Colorado Springs.

Example: An auto insurance company denies a policyholder’s valid claim for repairs to her vehicle after an accident without giving a reason for the denial.

Failing to conduct a prompt and complete investigation

Insurance companies must conduct prompt and complete investigations into all valid claims made by policyholders. If your insurance company does not properly investigate your claim, it may be acting in bad faith.

Example: A homeowner’s insurance company visits a policyholder’s home after a fire and concludes a fire occurred, but denies all or part of the valid claim without completely investigating the cause of the fire, or the coverage due the insured under the insurance policy.

Offering less money than a claim is worth

Insurance companies often offer policyholders less money than their claims are worth. When an insurance company intentionally makes a “lowball” offer to a policyholder, it is acting in bad faith.

Example: An motorist incurs reasonable and necessary medical bills totaling $15,000 after an automobile accident. The injured motorist has 5,000.00 in medical payments insurance, but her insurance company unreasonably offers to pay for only $1,000.00 of her medical bills.

Delaying or denying decisions on claims or requests for approval for medical treatment

Insurance companies know that time is of the essence when it comes to approving requests for medical treatment. If your doctor has prescribed care that that he believes is reasonable and necessary to treat a medical condition, your insurance company has a duty act on that request within a reasonable amount of time. If your insurance company unreasonably delays or denies your claim, you may have a claim for bad faith.

Example: A policyholder submits a valid request for approval for a surgery after doctors have informed her it is necessary. 3 months later, the insurance company has yet to approve her request, or unreasonably denies the claim without a valid basis.

Delaying or denying decisions on claims or requests for approval for medical treatment

Refusing to pay a valid claim

If you have submitted a valid claim to your insurance company, and it is refusing to pay or settle your claim, the insurance company may be acting in bad faith. An insurance policy is a contract, and if an insurance company fails to fulfill its obligations to the policyholder, it may be held liable for bad faith breach of the insurance contract.

Example: A homeowner’s insurance company refuses to pay a policyholder’s valid claim for damage suffered to her home in a tornado, which is covered by the policy.

Making threatening statements

An insurance company should never make threatening statements to a policyholder. If your insurance company has threatened you, contact a bad faith insurance lawyer right away.

Example: A homeowner’s insurance company accuses a homeowner of arson or fraud after he files a valid claim for fire damage to his home and threatens to call the police.

Misrepresenting the law or policy language

If your insurance company has intentionally misrepresented the law or language in your insurance policy, and has denied a valid claim based on this misrepresentation, you may have a claim against your insurance company for bad faith. As part of the duty of good faith and fair dealing, insurance companies must be truthful in their statements about the law and your policy.

Example: An insurance company tells a policyholder that he could be found guilty of insurance fraud for making an honest error error on a claim submission, such as transposing digits in a phone number or address, or stating an incorrect date.

Putting insurance company profits over a policyholder’s valid claim

Insurance companies should never avoid paying a policyholder’s valid claim to bolster their own profits. Insurance company tactics including lowballing and improperly denying valid claims may constitute bad faith.

Example: A health insurance company denies a policyholder’s valid claim for an expensive surgery or medical procedure because it does not want to incur the expense or set a precedent for future similar claims, even though it is clearly covered by his policy.

Delaying payment of a valid claim

If you ask your insurance company for documentation in support of their decisions, the company must comply with your request. Your insurance company should never refuse to provide you with a copy of your policy or other coverage-related documents that it relied upon in denying your claim.

Example: An auto insurance company approves a claim for repairs to a vehicle, but does not issue a check to the policyholder or repair shop for 3 months.

Refusing reasonable requests for documentation

Insurance companies should not unduly delay payment of valid claims. If your insurance company has failed to make a timely payment of your valid claim, you should consult with a bad faith insurance lawyer to discuss your rights.

Example: A beneficiary of a life insurance policy files a claim, which is denied. The life insurance company refuses the beneficiary’s request for documentation it relied upon in denying the claim in support of its decision.

Bad Faith Insurance Claim Practices Q&As

How much will it cost to hire a bad faith insurance lawyer?

Hiring a bad faith insurance lawyer often involves a contingency fee structure, meaning you won’t pay upfront costs. Instead, your lawyer receives a percentage of the settlement or judgment.

What damages can I recover in a bad faith insurance lawsuit?

In a bad faith insurance lawsuit, you may recover compensatory damages for the original claim, emotional distress, attorney’s fees, and sometimes punitive damages to punish the insurer for their misconduct.

What's a bad faith insurance lawsuit?

A bad faith insurance lawsuit occurs when an insured person takes legal action against their insurer for not fulfilling contractual obligations without a reasonable basis.

How to sue an insurance company for bad faith claims?

To sue, gather evidence of the claim and denial, consult with a bad faith claims attorney, and file a lawsuit within the statute of limitations.

How do you win a bad faith insurance lawsuit?

Winning involves proving the insurer’s obligation to cover the claim, showing the claim was handled improperly, and demonstrating damages resulted from this bad faith.

How long do I have to file a bad faith insurance claim?

The timeframe varies by jurisdiction but generally ranges from one to four years from the claim denial date.

What are types of insurance company bad faith tactics?

Types include refusing to pay valid claims, not conducting a thorough investigation, and unnecessary delays in processing claims.

How can I tell if my insurance company acted in bad faith?

Signs include lack of communication, refusal to explain claim denials, and offering significantly less than the claim’s worth.

Disclaimer: Information provided on this site is NOT formal legal advice. It is generic legal information. Under no circumstances should the information on this site be relied upon when deciding the proper course of a legal action. Always get a formal case evaluation from a licensed attorney if you think you might have a personal injury lawsuit.

Bad Faith Insurance Tactics