Dealing with insurance companies and claims can be aggravating even when all goes smoothly. It gets even worse when the insurance company doesn’t deal with you in an up-front manner. Here are 3 examples of bad-faith insurance practices that are most commonly employed to avoid paying out on legitimate claims.
1. Denial, delay & documentation
Insurance firms know that most of us view dealing with their processes about the same as we view a trip to the dentist. They use this to their advantage in trying to make the claim process as uncomfortable as possible.
That starts with outrightly denying a legitimate claim. They know that the vast majority of people will simply give up in discouragement.
Less extreme measures include simply delaying payment for no reason. The hope is that maybe the policyholder will just forget about it. Another tactic is to demand unreasonable levels of documentation. This may include redundant information and paperwork that isn’t mentioned within the policy itself. Again, the hope is to break you with discouragement.
If all else fails, the insurance company may try to change the terms of the policy after the claim is filed and even cancel the policy.
2. Investigative shenanigans
The insurance company has every right to investigate a claim after it’s been filed. An unethical firm will use this legitimate process in illegitimate ways, including using illegal methods to get information about the claim or strategies aimed at a lower appraisal cost of the damage. In extreme cases, they include threatening the victim.
All of these are again aimed at discouraging people by making them feel they are in a fight they can’t win. The best outcome for a bad faith insurance company is when the client simply gives up.
3. The lowball offer
While coming in low has a certain legitimacy as part of the negotiating back-and-forth, there are offers that are unreasonably low. It’s one thing for a carrier to propose a payout that’s on the lower end of a legitimate price spectrum based on the terms of the policy. It’s quite another to simply throw out a low number that can’t be remotely traced to the policy terms in any way.
One reason for this is that the insurer may also be handling the claim of the opposing party, a clear conflict of interest. They may not disclose the upper end of the policy limits.
No matter what the reason, remember that there are laws in place to protect you and there are attorneys who know how to handle these situations. Bad faith insurers can be held accountable. Don’t give up; get the legal support you need.