Your Rights When Your Insurer Acts in Bad Faith

You pay your insurance premiums faithfully, expecting a safety net should disaster strike. But when you file your claim, you may instead encounter a tangled web of denial and delay. If your insurance company seems not to be properly responding to your claim, it may be acting in bad faith. In that event, an understanding of your rights is essential to taking appropriate legal action.

Insurer bad faith typically occurs when a company neglects or refuses to pay the fair value of a claim without a legitimate reason. In such cases, you can bring a lawsuit against the insurer to recover not just the money owed under your policy but potentially money damages exceeding the policy limits to compensate for the insurer's misconduct.

Here's a closer look at the tactics insurers might employ to avoid paying claims:

• Lowball settlements — The insurer offers a settlement amount that's significantly less than what your claim is truly worth. They may hope you'll be desperate enough to accept a meager sum to cover your losses without going to court.
• Rescission by technicality — Here, the insurer attempts to cancel your policy retroactively, citing a minor technicality in your application or paperwork. If successful, they can avoid paying a claim entirely.
• Denial of coverage — The insurer simply denies your claim, arguing it's not covered under your policy. This can be based on a negligent or intentional misrepresentation of policy terms.
• Stonewalling — The insurer intentionally delays the processing of your claim, often through excessive paperwork demands or slow communication. The goal is to wear you down until you abandon your claim.
• Improper investigation — A thorough investigation is necessary for a fair claim assessment. However, an insurer may conduct a superficial investigation or ignore key evidence to justify denying your claim.
• Unreasonable policy interpretations — Here, the insurer interprets the policy language in an overly strict and unfair manner in order to deny or minimize your claim payout.
• Fraudulent denials and underpayments — This is the most egregious tactic. Agents and insurers may deliberate ignore policy language or manipulate facts to avoid full payout.

So, what should you do if you discover or suspect any of these actions? The first and most important step is to reach out to an experienced insurance bad faith attorney who can meticulously examine your situation, analyze your policy terms and the insurer’s actions and take an appropriate course of action. 

Don't delay taking action to enforce your rights. There is a two-year time limit (known as the statute of limitations) to file a bad faith lawsuit, starting from the time you discover the insurer's actions.

If you feel that you are not being treated fairly by your insurance company, call Pulverman & Pulverman, LLP at 805-962-0397  or contact us online to schedule a free consultation.