Feeling overwhelmed and frustrated is a common reaction when an insurance company rejects a claim. Not every denial is intentional, but there are certain red flags that can mean your insurance company is being unjust. In order to safeguard your rights, it is important to know what a poor faith denial is.
What is Bad Faith in Insurance?
When insurance companies violate their policyholders' rights or their legal and contractual commitments, it is considered bad faith. This may take the form of willful delay, underpayment, or outright denial of a genuine claim. It is expected that insurers will conduct comprehensive claims investigations, communicate openly, and pay out claims quickly when appropriate. A bad faith claim against the insurer can arise from failing to do so.
Indicators That the Denial of Your Claim May Be Bad Faith
Missing Clarification
Something may be amiss if the insurance company refuses to pay out on your claim and doesn't explain why. Reasons for a valid rejection should be provided, including the particular policy requirements that were the basis for the denial. One common strategy to dissuade further investigation of the issue is to provide a generic or nebulous response.
Postponed Conversations and Investigations
An acceptable timeline for claims processing is mandated by law for insurers. It could be a symptom of bad faith if there are long gaps in communication or investigations with no apparent justification. It is not uncommon for policyholders to be tricked into withdrawing their claims when they are told there may be delays.
Deception Regarding Policy Provisions
Insurers have the potential to reject coverage based on misunderstandings or misrepresentations of policy language. Incorrectly stating that some damages are excluded or misclassifying the nature of your claim are two examples of what could happen. It might be worthwhile to challenge the refusal letter if it uses policy words that don't align with your understanding of your coverage.
Unjustified Denial of a Legitimate Claim
There may be evidence of bad faith on the part of your insurer if they refuse to pay out on a claim that is legally covered under your policy. An example of bad faith on the part of the insurer would be a denial of coverage that is unsubstantiated by the policy or other relevant facts. It is critical to assess your insurance and get advice from an expert if needed in such situations.
Actions to Take Should You Suspect Bad Faith
Remedy Procedures for Alleged Acts of Malevolence: Get a Comprehensive Rejection Letter: Get a formal explanation from your insurance company outlining the reasons your claim was refused, being sure to cite any relevant policy restrictions.
Assemble Documentation: Document all correspondence with your insurance, including correspondence via email, letters, and the logs of your phone calls.
Consult an attorney: Find a lawyer with an interest in insurance claims if you feel your claim was unfairly denied. You can get their assistance in figuring out what to do and, if necessary, filing a bad faith lawsuit.
In order to get the coverage you need, it's important to know your rights as a policyholder and how to spot indicators of bad faith.