Insurance Bad Faith
Insurance bad faith is the term used to describe what happens when an insurance company does not follow all of the guidelines that are provided by the insurance industry and the government. There are normally five actions in which an insurance company can show bad faith to an insured man or woman. These five actions include an untimely response to a claim, the use of improper investigation procedures, an exceedingly low settlement offer, the denial of a claim for no reason, and the act of refusing to settle a claim.
Untimely Response to a Claim
After you file a claim to the insurance company, that insurance company normally has a certain amount of time to respond to the claim. If your insurance company has not responded to any of your phone calls regarding the claim, it may be best for you to contact the insurance company in writing. You should request a response to the claim by a certain date. If the insurance company refuses to respond to any of your contact efforts regarding the claim, you have the right to file an insurance bad faith lawsuit against the insurance company. You will be rewarded for damages. You will normally receive more than what the claim is worth. However, you must prove that you were injured due to the fact that the insurance company did not pay for the claim.
The Use of Improper Investigation Procedures
All insurance companies have to perform an investigation for all insurance claims. However, it is imperative that the insurance company use legal and legitimate methods of investigation. For example, the insurance company should avoid using a biased investigator. A biased investigator could sabotage the investigation. In addition, the insurance company should avoid using any other demeaning investigation methods. Doing so will constitute bad faith.
An Unreasonably Low Settlement Offer
If an insurance company offers a settlement price that is unreasonably smaller than the value of the claim, this will constitute as bad faith. For example, if a person has hospital expenses that cost around thirty thousand dollars and an insurance company only offers ten thousand dollars, that person has the right to file a lawsuit. This is because that person has no other choice but to start litigation in order to recover the medical costs while being injured.
Denying an Insurance Claim for no Reason
If an insurance company denies an insurance claim, certain procedures must be followed. For example, the insurance company must notify you in writing. This notification must provide certain contract provisions or contract terms. These terms or provisions should explain why the insurance claim has been denied. In addition, an adequate investigation must be conducted in order to make sure that the insurance company makes the right decision. If you are not given an adequate reason as to why your claim has been denied, you can file a bad faith lawsuit.
Refusing to Settle an Insurance Claim
If an insurance company refuses to settle an insurance claim that is undoubtedly within the insurance policy limits, you can file a bad faith lawsuit. This is because denying a claim that should be settled exposes the insured to liability that is above policy limits. The insurance company is not protecting you against additional liabilities, as it should.