Examples of Bad Faith Insurance Tactics
Insurance companies are meant to provide peace of mind when the unthinkable happens. You pay your monthly premiums in good faith, assuming that your provider will fully assist you should you need to file a claim. Unfortunately, there are instances when insurance carriers may go out of their way to deny or delay a claim. These practices are known as “bad faith” tactics, and they are prosecutable by law. Read our examples of some of the more common bad faith insurance tactics to know what to watch out for.
Common Bad Faith Insurance Examples
No Reason Given for Denial
Your insurance carrier must give a clear reason for denying all or part of a claim. If you receive a denial with no explanation or vague reasoning, you may be dealing with a bad faith claim. The initial claim must be valid and the claimant must have followed proper protocol, including providing evidence and filling out required paperwork.
Example: Sara files an auto insurance claim for hail damage. She has comprehensive coverage and understands she will need to pay her deductible before the remainder of repairs are covered. She provides all requested documentation, including photographic evidence and invoices. She unexpectedly receives a denial of her claim, with no explanation given. When she attempts to reach the company for details, they have become difficult to reach or offer only a vague explanation.
Unfairly Delaying a Claim or Denying Due Coverage
Your insurance company has a duty to process your claim in a timely manner. You should not have to go without medical care or a roof over your head due to your insurance carrier dragging their feet. The exact amount of time your carrier has to make a decision on your claim will vary depending on the scenario. However, if you feel your claim is being unfairly delayed, you may need to contact an insurance attorney to ensure your carrier is not acting in bad faith.
Example: Jaime experiences a flood in the basement due to a pipe bursting. She calls her insurance company right away in the hopes of promptly mitigating damage and avoiding further issues due to mold/mildew. She provides all requested information, including updated contact details.
A week goes by, and she has not received a return call from an adjuster. She attempts to call again and is sent to voicemail. Another five business days pass, and someone finally answers. By this time, further damage has occurred to the home’s structure and it will require mold treatment.
The insurance company only agrees to pay for the water damage, not the mold growth. In most cases, insurance should cover mold when it occurs as a result of a “covered peril.” Therefore, if the flood was covered and it caused the mold, the mold should also be covered. In this case, Jaime has been a victim of both unfair delays AND misinterpretation of her policy.
Poor or Incomplete Investigation
Your insurance company should be willing to conduct a thorough investigation into your claim. This includes on site inspections in the case of roof damage, fires, or other homeowners insurance claims. A claim should not be denied in full or in part due to the company’s failure to properly collect evidence.
Example: John files a homeowner’s insurance claim after a storm causes significant roof damage. He provides photographs and fills out all necessary forms in a timely manner. As far as he knows, the roof was relatively new and in good condition. The insurance company tells John they do not need to send an inspector to evaluate the roof further. They then deny the claim partially due to “normal wear and tear.” It is highly unlikely they could have made this decision based on photographic evidence alone. John may be looking at a bad faith claim.
Threatening a Policyholder
Your insurance adjuster should never threaten you or accuse you of anything. They are expected to act on your behalf and conduct a thorough investigation, then make a decision that they clearly relay to you and/or your attorney.
Example: Toni files a fire damage claim for an accidental kitchen fire. Before she has a chance to submit any paperwork or evidence, her insurance adjuster accuses her of setting the fire herself and threatens to call the police. Intimidated, Toni decides not to file a claim at all and pays for repairs herself.
Bad Faith Insurance Attorney Colorado
If you have experienced any of these scenarios, or you are otherwise unsure if your insurance carrier is behaving appropriately, contact David Roth with the Roth Group. Dave is a skilled insurance attorney who holds negligent insurance companies accountable. Call or go online today to schedule your free consultation.