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3 forms of bad faith insurance practices that could hurt your claim

On Behalf of | Oct 25, 2021 | Insurance Law |

When you make an insurance claim, it may be against your own policy, or it could be against the coverage of someone else who hurt you. In either case, the insurance company has a legal obligation to you as a policyholder or as a claimant.

You should be able to receive appropriate compensation based on the coverage carried and the circumstances. After a crash that damages your vehicle and leaves you injured, you should be able to expect reasonable compensation for your medical bills and property damage, as well as your lost wages.

Unfortunately, some insurance companies will engage in bad faith insurance practices to deny people what they deserve. What are some examples of bad faith insurance?

Denying a reasonable claim

If you have reviewed your policy or the policy of the other person and know that it is active, you should be able to make a claim for a situation that falls under the scope of the insurance policy.

Claiming the cost to repair your vehicle after a car crashed or medical expenses from a homeowner’s insurance policy after you fall down someone’s stairs would generally be appropriate and covered losses. When an insurance company unreasonably denies an appropriate claim, that could be an example of bad faith insurance practices.

Inappropriately delaying the payout on an approved claim

Just getting the insurance company to agree to pay may not be the end of the battle. Some insurance companies will repeatedly delay the payout on a claim, leaving you unable to get your car fixed or facing collection activity from the local hospital.

An insurance provider should make every attempt to pay out on valid claims quickly after approving someone the claim. Unreasonable delays can cause hardship for the claimant or policyholder.

Offering low settlements to avoid their obligations

One of the most nefarious ways an insurance company shirks its obligations to policyholders is through offering low settlements on valid claims. In a settlement arrangement, the company protects itself from any future claims, so making a low settlement is a way to trick someone into accepting less than they deserve.

Although the company only has to offer the maximum amount of coverage available, paying out far less than the full amount of the policy when someone has massive property damage or extensive personal injuries could be a form of bad faith insurance.

Recognizing the warning signs of bad faith insurance can help you better manage your negotiations with an insurance company when you need to make a big claim.