What are 'Bad Faith' Insurance claims?

Under United States law, insurance companies owe a duty of good faith and fair dealings to the clients they insure. When insurance companies and attorneys knowingly break that trust to avoid paying fair compensation to their customers or to injured parties who are suing them, which is called acting in bad faith.

Insurance coverage is becoming more expensive each year. We live under a system where certain coverage like automobile insurance is mandatory. Now, under Obamacare, we're also bound by law to have medical coverage.

As much as paying these premiums can hurt at times, having a legitimate insurance claim denied by companies using bad faith claim tactics makes it even worse. It's like pouring salt in an open wound. People who are victimized by greedy companies who stonewall claims and refuse to pay just compensation have a right to feel angry and violated.

Here is a list of some of the more obvious bad faith tactics:

  1. Automatically denial of coverage - Some shady companies will automatically deny responsibility and coverage on every initial claim. They don't even investigate the claim itself.
  2. Unreasonable amount of time for response - Delay, delay, delay is another tactic of bad faith. Companies will take weeks and months before they even confirm or deny whether their insured client was covered at the time the suing party injured.
  3. Refusing to negotiate - This is a common tactic used against parties who file personal injury claims without going through an attorney. By never returning phone calls or refusing to respond to written communication, the insurance company is saying, "If you want to negotiate a settlement with us, hire yourself a personal injury lawyer."
  4. Failing to deny your claim within a reasonable time period- This is another delaying tactic hoping you'll lose heart and just give up trying to get an answer of the status of your claim.
  5. Refusing to investigate your claim - This is the ultimate stonewall tactic. Your claim sits in an "in" basket and is never acted upon.
  6. Refusing to negotiate a fair settlement - Even when the claim is obviously legitimate, companies will lowball a settlement and refuse to negotiate a fair one.
  7. No clear written explanation for denial of claim - All responses to the claim will be vague with no logical or legitimate reason for denying the claim.
  8. Citing laws improperly to mislead the claimant - This old tactic of purposely referencing incorrect case law or statute numbers is another delay tactic intended to confuse and dismay the claimant.
  9. Changing adjusters solely for the purpose of delay - Once a claimant has finally entered into some form of negotiations, companies will change adjusters so you'll have to start the process all over again.
  10. Failure to provide information that is relevant to your claim - Companies will hold back documents or information the claimant should have if they feel it will jeopardize their denial.
  11. Purposely delaying negotiations to let the statute of limitations expire
  12. Using incorrect dates of statue of limitations in order to deny a claim
  13. Failure to pay the settlement amount once it's been agreed to - This is probably the most egregious bad faith tactic of them all. After the claimant has jumped through all the hoops and over all of the obstacles thrown up by the insurance company and reached a settlement agreement, the company refuses to make good and pay it. In essence they're saying, "If you want our money, sue us."

If you feel you are a victim of a bad faith insurance tactics, you need to consult a personal injury lawyer. Let an attorney fight the insurance company to resolve the issues so you can proceed with your claim.

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T.J. Smith, Attorney at Law
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Louisville, KY 40202

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