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What to Know About Insurance Bad Faith

October 11, 2023Insurance,Personal Injury

Insurance bad faith refers to the dishonest or unfair practices of an insurance company towards its policyholders. This can manifest in various ways, so it is critical to understand the signs and how to navigate such situations. If you believe an insurance company is acting in bad faith towards your claim, call a Fresno Personal Injury Lawyer at Freedman Law for help holding the insurer accountable.

Signs of Insurance Bad Faith

Recognizing signs of bad faith insurance tactics is crucial for policyholders to protect their rights and interests. Here are some common indicators:

  • Unjustified Claim Denials: When an insurance company denies a valid claim without providing a reasonable explanation or evidence to support the denial.
  • Delaying Claim Processing: If an insurer unnecessarily prolongs the claims process without valid cause, leaving the policyholder in financial distress.
  • Inadequate Investigation: Failing to conduct a thorough and fair assessment of the claim, potentially leading to an unjust denial or an insufficient settlement offer.
  • Misrepresentation of Policy Terms: Providing misleading information about the policy’s coverage, exclusions, or limitations, leading to misunderstandings and disputes.
  • Offering Low Settlements: Providing a settlement amount that is substantially lower than what is reasonable based on the extent of the covered loss.
  • Failure to Communicate: Ignoring or avoiding communication with the policyholder regarding the status or details of the claim.
  • Misinterpretation of Policy Language: Interpreting policy terms in a way that favors the insurer and goes against the reasonable expectations of the policyholder.
  • Breach of Contractual Duties: Failing to fulfill the contractual obligations outlined in the insurance policy, such as providing timely payments or coverage as promised.
  • Intimidation or Coercion: Using aggressive or coercive tactics to pressure the policyholder into accepting an inadequate settlement or dropping their claim.
  • Retaliation for Filing a Claim: Penalizing or taking adverse actions against a policyholder for exercising their right to file a claim, such as raising premiums or threatening policy cancellation.
  • Lack of Transparency: Withholding information or being evasive about the claim process, policy terms, or relevant legal requirements.
  • Refusal to Provide Documentation: Failing to provide requested documents or information related to the claim which can hinder the policyholder’s ability to substantiate their case.

Rights of Policyholders

Policyholders have several rights when it comes to dealing with an insurance company:

Right to Honest and Fair Treatment

Policyholders have the right to expect honest and fair treatment from their insurance company. This includes timely claims processing, clear communication, and fulfilling contractual obligations.

Right to Prompt Claims Handling

Insurers are obligated to process claims in a timely manner. Delays without valid cause can be indicative of bad faith.

Right to a Thorough Investigation

Policyholders are entitled to a thorough and fair investigation of their claims. Insurers should not arbitrarily deny or undervalue a claim without proper justification.

Right to Receive a Reasonable Settlement

Policyholders have the right to receive a settlement amount that is reasonable and commensurate with the extent of the covered loss.

Right to Clear Policy Information

Insurers are responsible for providing clear and accurate information about policy terms, coverage, exclusions, and limitations.

Right to Dispute Claim Denials

If a policyholder believes their claim has been unjustly denied, they have the right to dispute the decision and seek a review of the claim.

Right to Non-Retaliation

Policyholders have the right to file a claim without fear of retaliation from the insurer, such as increased premiums or policy cancellations.

Bad Faith Insurance Claims

Any individual who holds an insurance policy and believes they have been subjected to unfair or dishonest practices by their insurance company can file a bad faith insurance claim. In addition to the primary policyholder, third parties with a legitimate interest in the policy can also potentially file a bad faith claim in certain circumstances. For example, if you file a car accident claim with the at-fault party’s insurer and they engage in bad faith tactics, you have the right to pursue a bad faith insurance claim. If successful, you can hold the insurer liable for the compensation you are owed.

If you or a loved one believes an insurance company is acting in bad faith, contact a Fresno personal injury lawyer at Freedman law or call (559) 447-9000, for a free consultation.