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Identifying and combating insurance bad faith

While some individuals might feel that working with their insurance carrier on a claim was a straightforward process, others might feel frustrated and intimidated by the entire experience. After a motor vehicle collision or a building repair emergency, it is not uncommon for people to feel at odds with the claim process. Likely, they have experienced some level of insurance bad faith.

When presented with a claim, the insurance company must act in good faith. They must thoroughly investigate the claim and reach a fair settlement based on objective data. Unfortunately, it is not uncommon for the carrier to act in bad faith. This can mean numerous things, including:

  • Devaluing the claim: The carrier might take steps to reduce the overall claim amount. This can come in the form of ignoring certain evidence or arguing that certain medical diagnoses are linked to pre-existing conditions rather than the accident.
  • Delaying the claim: Business owners, homeowners and injured individuals all rely on the company to investigate and finalize the claim in a fair amount of time. By delaying the claim, the insurance carrier could be hoping to increase the desperation factor in their policyholder, which could lead to them agreeing to a lower settlement amount.
  • Denying the claim: It could be the ultimate expression of insurance bad faith when the carrier simply denies the claim based on invalid conclusions. Claim denials happen all the time, but when the denial is centered on unreasonable expectations or a negligent investigation, the policyholder must hold the company accountable.

Additionally, while it might seem counterintuitive, a carrier that rushes to draft a quick settlement might also be acting in bad faith. The company might rush the settlement paperwork to prevent the policyholder from completing further research or obtaining additional medical diagnoses which might increase the value of the original claim. Policyholders must take care to thoroughly evaluate the claim settlement before signing any documents.

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