Whether it’s homeowners insurance or auto insurance, having a claim denied can be a frustrating, inconvenient, and even expensive experience. Insurance companies aren’t just paid to reimburse you for claims; they are also paid to make the process of resolving these issues much easier. Naturally, if your insurance company decides to fight you, you may find yourself in a stressful and difficult situation. A professional legal firm can help you receive compensation regarding your insurance claim and protect you against any legal steps that your insurer may take against you.
When Insurance Companies Act in Bad Faith
There are some legitimate reasons why an insurance company could potentially turn down a claim. For instance, a homeowner’s insurance policy could reject a claim regarding earthquake damage if earthquake damage was not under their terms of coverage. But sometimes an insurance company denies a claim not because the claim shouldn’t be covered but instead because they don’t want to cover the claim. This is known as bad faith. In the legal world, bad faith refers to actions that are taken during negotiations with the primary purpose of avoiding any payout rather than finding an equitable and fair agreement. When insurance companies act in bad faith attorneys can help.
Common Reasons for Bad Faith Denials
Once an insurance claim has been denied, the claimant has to go through a lengthy appeals process. Not only does the appeals process itself often cost money but it also takes time — time during which the claimant has not been made financially whole. A professional legal representative may be able to not only speed up the process but also recover the costs associated with the process.
- Payout out too slowly. Insurance companies are required to pay out in reasonable amounts of time, though the specific amount of time is usually within the original insurance documentation. If the insurance company delays their payout substantially, this can be considered bad faith; it’s an attempt at keeping the claimant’s money for as long as possible, even if the insurance company does intend on eventually paying out. Those who have been waiting too long for their insurance claim to pass through may want to seek out legal remedy.
- Continuing unnecessary negotiations. Similar to paying out too slowly, the insurance company may continue to aggressively negotiate rather than accepting a claim that should clearly go through. These negotiations are considered to be in bad faith both because the insurance company is seeking to pay less than it should and because the insurance company is seeking to make the process much longer than it naturally should be.
- Denying coverage based on a technicality. An insurance company may find seemingly minor reasons to deny coverage. For instance, they may attempt to class ordinary water damage as “flooding.” In general, when a claim appears to have been denied based on a technicality, it’s probably still bad faith. Contract law often takes into account the true spirit of a text rather than simply the literal meaning.
- Offering a settlement. Some insurance companies may offer a very low settlement immediately in place of a full claim. This is also considered to be negotiating in bad faith; it often implies that the insurance company will either fight the full claim or will delay the full claim, and therefore encourages individuals to accept a lower amount than they would otherwise truly be entitled to.
There are many situations in which insurance companies have been found guilty of negotiating in bad faith when it comes to insurance clams. If you feel as though your claim has been unfairly denied, you may be one of these cases. You may still be able to pursue both your claim and any associated damages if you work with an attorney.
Insurance companies have lawyers — and that’s what makes it so critically important for you to procure a lawyer as well. If your insurance claim has been denied, you may also shortly be on the wrong end of a lawsuit regarding insurance fraud. Even if the insurance company chooses not to pursue criminal charges, you’ll still have the unpleasant task of covering expenses out of pocket. Contact us today if you want a free, no obligation consultation regarding your insurance issues.