When an insurer refuses to pay, regardless of the type of insurance policy, the rug can feel pulled out from under the insured. The insured may have relied on their insurance policy to get them through a difficult time. For that reason, insureds who believe they are victims of insurance bad faith should be familiar with examples of what may constitute insurance bad faith and what they can do about it.
Examples of insurance bad faith
Examples of insurance bad faith can include:
- Unreasonable delays: when an insurance company drags its feet and drags out the time it takes them to investigate a claim, it may be an example of insurance bad faith. The insurance company may hope that the policyholder will give up and discontinue pursuing the claim. There are typically deadlines in place for insurance companies to investigate claims. That can vary by state.
- Failure to conduct a complete investigation: all insurance policies contain an implied duty of good faith and fair dealing. Part of this requirement includes that the insurance company needs to conduct a prompt and thorough investigation into the policyholder’s claim.
- Misrepresenting the law or policy language: also part of the duty of good faith and fair dealing, insurance companies are required to be truthful in their representations of the insured’s policy and the law and should not misconstrue the language against the policy holder.
- Refuse to pay a valid claim: laws require insurance companies to use fair claims practices. If a claim that is covered by the policy is denied, it can be an example of bad faith.
- Offering less than the claim is worth: low balling a claim for less than it is worth may also be an example of insurance bad faith.
Other possible examples of insurance bad faith can include deceptive or threatening statements or practices on the part of the insurance company. Policyholders have important legal protections against these harmful practices and insurance bad faith that they should be aware of.