Common Bad-Faith Insurance Company Tactics

Published on: 07/24/23 — In 

Insurance company bad faith coverage can be a disappointment when it fails to protect you. Bad-faith claim tactics used by some insurers can prevent insurance policyholders from receiving a legitimate claim that they are owed.

These bad faith insurance practices include unreasonable insurance company delay tactics in investigations and not making reasonable insurance contract payments. Insurance companies can use bad-faith tactics such as misclassifying claims, refusing to pay without good cause, offering low settlements, or denying valid claims altogether.

Chicago bad faith insurance attorney Chris Ktenas

These insurance company representative practices benefit claim adjusters and insurers, shift risk onto consumers, and force victims to seek punitive damages through bad-faith lawyers. Policyholders can take legal action if for unreasonable delays or if their claim is rejected.

Our Chicago bad-faith insurance lawyers can help with your claim denial or insurance companies' deceptive practices. Call us today at 312-300-2515 for more information.

The Claim Was Not Approved and No Explanation Was Provided

Insurance claims should be investigated fairly and only denied with valid reasons. However, some bad faith breach insurance companies deny medical expenses, automobile expenses, and personal injury claims without fair dealing or proper justification.

This may be disheartening for claimants who have followed the proper procedure requests for documentation and submitted standard common forms, including medical records, body shop invoices, and requests for additional documentation.

a denied insurance claim form on a desk

Those who submitted the claim on time and are wrongly denied may feel powerless to challenge the bad-faith insurance claim decision. Individuals with insurance should make phone calls, file an appeal to the insurance board regarding the decision made by the major insurance company, and seek clarification on settlement offers or denials.

Consumers must understand their insurance claim process and their right to obtain answers from claims adjusters that use bad-faith insurance tactics. This helps them fight back against sudden and unjustified denials that lack merit.

The Investigation Was Not Conducted Promptly and Thoroughly

Insurance carriers must investigate accidents promptly to identify contributing factors that affect liability or coverage issues. This requires a thorough investigation by real people who can see the damage in person, of personal or property damage in accident claims not just a few photos of the scene.

Failing to investigate promptly is a common tactic in unfair practices and can be seen as acting as a bad faith insurer, as it could prolong negative impacts on the policyholder's interests.

When an insurer responds slowly, it's not just unethical tactics, it can also hurt morale. This lack of care can spread to other customers and damage the company's reputation leading to public outcry.

Insurance company tactics leading to delays can also lead to misunderstandings and missed benefits. Failing to investigate incidents promptly can result in accusations of negligence and financial losses from lawsuits or additional claim settlements.

Providing a Compensation Amount That is Lower Than the Estimated Value of a Claim

When dealing with insurance companies after a dispute or statutory claim, it is important to know that they may attempt to complete a lowball offer. A lowball offer is when the settlement offered by the insurance company is considerably lower than the worth of your personal injury lawsuit case.

Although this type of unfair settlement bargaining tactic may appear obvious, many victims believe they have no choice but to accept the first offer from an insurance company without trying to negotiate for more money.

This assumption could prove problematic as accepting a lowball offer marks the finalized acceptance of your claim, meaning you can't go back and try to negotiate a higher settlement or prompt further negotiation for compensation.

To protect yourself from financial negligence and ensure that you receive a fair settlement, it is important to never accept an insurance company's single lowball offer without attempting meaningful bartering or preferably external consultation from legal experts.

Failing to Provide Compensation for an Approved Request

If your claim is valid and the insurance company does not carry out a complete investigation and continues making unreasonable demands but still refuses your claim via a bad-faith letter this may be an insurance company's bad-faith business dealings.

If they are not genuinely trying to investigate and process a valid claim you are dealing with a bad faith claim insurance company. Double-check all paperwork to ensure accuracy and completeness before submitting it to avoid bad-faith bargaining cases.

an insurance claim form, pen, and glasses on a desk

If you submit an incomplete or inaccurate claim, the insurer may simply deny your application outright without allowing you to correct it. This could be a sign of bad faith practices as it prevents you from correcting any mistakes in your application and obtaining payment for a valid claim.

If this occurs, partnering with an experienced bad-faith insurance attorney can help rectify this situation by holding the insurance company responsible for refusing a valid claim.

Misrepresenting the law or the facts can have serious consequences. Insurance adjusters may try to minimize your claim and offer a lower settlement. They might downplay your injuries and pressure you to settle without legal advice.

They could also ask for a recorded statement or signature without allowing consultation. This is concerning and could harm you later. You should consult an experienced attorney and independent sources before agreeing to anything from an insurance adjuster.

Postponing the Payment of a Legitimate Request

Delaying payment after an insurance claim is approved can be incredibly frustrating for the policyholder. Unfortunately, this frustrating reality is all too common in the insurance industry. Insurance companies may take anywhere from a few days to several weeks or even months to issue a payment after they have approved a claim.

While any length of “reasonable time” could potentially be open to interpretation, a month should be considered the maximum length of reasonable time allowed without good cause for the delay. Any longer than that period could potentially indicate bad faith on behalf of the insurance company which is grounds for legal action on the part of the policyholder.

FAQ: How Long Does an Insurance Company Have to Pay a Car Accident Claim?

Policyholders should familiarize themselves with their policy and contact their insurer in case there are any undue delays in issuing payments no matter how short or long these might be. The sooner a dispute can be raised, the better as it may lead to faster resolution and may avoid potential lawsuits over bad faith behavior on behalf of insurers.

Moreover, if an insurance company fails to make a payment within thirty days after they have determined that a valid claim exists, then policyholders should seek out legal representation immediately as this constitutes behavior not done in good faith by an insurance provider.

Experiencing Bad Faith Tactics? Consult With an Attorney

Insurance companies must treat their customers fairly and act in good faith by law. Unfortunately, some companies may use bad faith tactics to avoid paying out benefits or denying coverage. If you have been a victim of bad faith tactics, it's recommended to consult a bath faith attorney who specializes in insurance law.

Ktenas Injury Attorneys has an experienced team who can help you understand your legal rights and fight for the compensation you deserve. Contact us today at 312-300-2515 to learn more about how we can assist you.