When you give your hard-earned money to an insurance company on a monthly basis, the policy you pay for is a legally binding contract between you and the insurer forcing them to provide you with proper insurance protection and to settle claims in good faith.
Unfortunately, insurance companies don’t always have the best interests of their customers in mind.
In such situations, a question needs to be asked: Did the insurance company violate the duty of good faith and fair dealings it owed to the policyholder?
If the answer is yes, you need to understand valuable steps in proving bad faith insurance.
Steps for Proving Bad Faith
There’s a small, but important distinction between having a differing opinion from the insurance adjuster and a company operating in bad faith. You can’t just assume the insurer is acting in bad faith because you don’t like the outcome.
You must have proof that they are unlawfully denying your claim, such as the adjuster refuses to give you a specific reason as to why there is a lower settlement than you expected. They also need to have said or done something to indicate they have used an improper settlement tactic.
Your best defense is knowing what to look for and what your options are:
- Statute of limitations. Don’t let this expire. If you do, proving bad faith is going to be much harder than expected.
- Use the term “bad faith” with the adjuster. Doing so will make you appear more knowledgeable and could possibly turn the situation around.
- Demand answers in writing. Tell your insurer you expect them to put the reasons for their denial or a low settlement offer in writing.
- Send a certified letter. Mail one to the adjuster if they do not do as you have requested in writing. Give the date of the conversation and note what you believe has been done in bad faith. Also, note that you asked for previous documentation that was not presented to you.
- Contact the state board – Your state’s insurance board is unable to force them to pay the claim, but reporting the insurance company is not something they will want on their record. They insurance company may be more apt to award you the settlement you deserve if you threaten to take this action.
- Contact an insurance bad faith attorney. If this matter needs to be taken to the next level, a personal injury lawyer who specializes in insurance bad faith lawsuit is your next step. They may be able to negotiate for a reasonable settlement on your behalf, or take the insurer to court as a last resort.