Bad Faith insurance claims 101

The reason why insurance companies exist is to make us feel safe. They do this by guaranteeing that, should anything bad happen to us or our belonging, they will be there to help us in our times of need. When you think about it, this makes perfect sense. After all, if you would decide to pay someone up front in order to feel secure, why wouldn’t you do it? This is the reason why many of us have decided to trust our insurance companies and buy home insurance. However, a good practice is not always a standard. There are those insurance companies that do not do what they say they would. They do not keep to their side of the deal. If that is the case, we may be talking about bad faith insurance claims. Let’s find out more about them.

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Insurance company is for profit busness

What is a bad faith insurance claim?

As we have already pointed out, an insurance company should provide you with your premium in case that you have suffered damage that should be covered by your insurance policy. However, insurance companies work for profit. Therefore, they will do their best to pay you as little as possible. Now, if they refuse to cover the expenses of the damage that you have suffered, you may be dealing with a form of bad faith insurance claims.

However, bear in mind that the refusal itself is not an evidence of bad faith insurance claims. An insurance company must have a good reason to deny you the premium. They may make an honest mistake and refuse to cover your expenses. Also, your insurance policy may not cover all the damages. Therefore, do not rush to conclusions in this case. While we may be talking about bad faith insurance claims, not every refusal of a home insurance claim is done in a bad faith.

Types of bad faith insurance claims

In order to be able to recognize that you are experiencing some form of bad faith insurance claims, you need to know what they are. If you feel like you have become a victim of such mismanagement, consult a public adjuster South Florida.

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Do not let your insurance company trick you

Following is the list of the most common bad faith insurance claims:

  • Insurance company refuses to pay a claim without a reasonable refusal reason
  • Disinterest in the investigation of your claim in a timely manner
  • Settle for less money
  • Insane amount of documentation and evidence required

The lack of a reasonable reason to refuse a claim

First and foremost, if your insurance company refuses a claim, they better have a good reason to do so. If they do not, then, there may be elements of bad faith in their decision-making process. Insurance denial is one of the most common ways that insurance companies try to keep more money to themselves. Therefore, bear this in mind and be careful if your claim is denied.

Disinterest to investigate your claim in a timely manner

Another way for insurance companies to deprive you of your money is to stall. By stalling, they would expect you to splash your own money on repairs and forget that they should cover for them. If you feel this has been the case with you and the damage suffered from hurricane, make sure to react as soon as possible.

Settle for less

An insurance company may offer you to settle for less money on the pretext of not having to go through complicated procedures. They would suggest that, by settling for less, you would receive money quickly. This surely is true. They would grant you the money as soon as possible. After all, paying to you quickly means that they will save money in the long run. If this happens to you, firstly remind them that they are bound by the insurance policy that both parties have signed. If they insist on you settling for less, kindly point it out to them that you are not interested to involve other entities in the process. Insurance companies are afraid of the penalties they would need to pay if you prove that they are performing in a bad manner.

The insurance company requires an insane amount of paperwork in order to process your claim

Insane amount of paperwork means that you may be a victim of a bad faith insurance claim
A reasonable amount of paperwork should be enough to get in the process an insurance claim

Another one of the tactics that insurance companies use in order to save money is to require their subscribers to provide an insane amount of paperwork of documentation and shreds of evidence of the damage that would make a subscriber give up on filing a claim. If you are uncertain of the situation that you find yourself in, get professional help. Penalties for bad faith insurance claims are severe and insurance companies fear them. Also, make sure to learn essential insurance terms before you go into battle.

Penalties that insurance companies pay in the case of bad faith insurance claims

As we have just pointed out, penalties are severe if a bad faith insurance claim is proved. Therefore, insurance companies are very careful not to get caught doing it. They may try to avoid paying their dues, but should quit if you point out that you may seek help elsewhere. If bad faith insurance claims are confirmed, insurance companies may have to pay the following penalties at once, in total:

  • Insurance premium cost
  • Statutory Penalties
  • Statutory Interest
  • Liability for Judgements in Excess of Policy Limits
  • Attorney Fees
  • Emotional Distress
  • Economic Loss
  • Punitive Damages

Add all of the above mentioned together and you will realize that we are talking about a very large sum. In fact, it is going to be much larger than the cost of the premium that you are entitled to. This is the reason why insurance companies do their best not to get caught in bad faith insurance claims.

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