Insurance Red Flags to Watch Out For

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Dealing with insurance companies can be tricky. When considering that denying and reducing as many claims as possible is how insurance companies make money, this is no surprise. Insurance bad faith is a legal term used to refer to the unjust actions of an insurance company in which a fair claim is denied or reduced, resulting in further financial harm to a policyholder. It can be difficult to identify insurance bad faith if you don’t know what to look for.

Insurance red flags that could indicate insurance bad faith:

  • Poor communication. The failure to respond or delay in responding to your communications could indicate that insurance bad faith is at play. Evading questions is a common indication of insurance bad faith.
  • Arbitrarily requested evidence. When an insurance adjuster requests evidence or documentation regarding your situation that does not have any relation to or bearing on the validity of the claim, this could indicate insurance bad faith.
  • Unreasonably low settlement offers. This is a common way that insurance companies practice bad faith. The initial settlement offer is often intended to low-ball the policyholder into accepting an amount that is insufficient to cover the party’s damages despite the amount their policy qualifies them for.
  • The adjuster seems to be intentionally misinterpreting policy language. If the adjuster you are speaking with seems to be intentionally misinterpreting your policy and the protections you should have according to that policy, this is a major red flag.
  • The adjuster seems to deliberately misinterpret your records. Another common type of insurance bad faith occurs when an insurance adjuster deliberately misinterprets a policyholder’s records in order to deny them compensation.
  • Unreasonable and/or repetitive delays in paying your claim. When this occurs it can be frustrating enough that some policyholders choose to forgo pursuing the claim.
  • The company requests that you pay part of the settlement yourself outside. This occurs when an insurance adjuster requests that the policyholder pay part of their own settlement outside of the preexisting agreement.
  • The company fails to conduct an adequate investigation of the situation. A faulty or insufficient investigation of the situation could be a red flag indicating that an insurance company is attempting to create a reason to deny a claim.

These are several red flags that could indicate insurance bad faith at work. Insurance bad faith is a serious accusation; sometimes even the mention of it can inspire an insurance adjuster to correct their behavior. However, due to the complexities of insurance law and the fact that it varies from state to state, it’s a good idea to talk to an attorney if you suspect you are a victim of insurance bad faith.

If you have suffered from insurance bad faith, you might be eligible to file a claim.

In a successful insurance bad faith claim, the injured policyholder could be entitled to a greater amount of compensation than the original claim was for. This compensation could come in the form of contract damages, compensatory damages, and punitive damages intended to punish the insurance company and prevent the same behavior from occurring again. If you suspect your insurance company of bad faith, you can write a formal complaint to the insurance company. You should also seek legal counsel to learn more about your situation and how you can get the compensation you deserve.