What Are Common Examples of Bad Faith Insurance Claims?

When you purchased your insurance premium, you no doubt believed that your insurance provider would cover your damages in the event of a crisis. After all, the purpose of insurance is to protect your finances in the event that some costly event—a natural disaster, an injury, a lawsuit—should occur. But now, one of those unfortunate incidents has affected you, and your insurance provider has denied your claim.

You may feel bewildered. After all, you are certain that your claim is valid—why would your insurance provider deny it?

Sadly, too many claimants have experienced this scenario. When an insurance provider wrongfully denies, delays or mishandles a claim that is otherwise valid, it is said to be acting in bad faith. To help you know whether your insurance provider has wrongfully denied your claim, take a look at the following examples of bad faith insurance claims.

1. An Unreasonable Delay

Insurance companies are not exactly known for being swift. Still, they have a responsibility to their clients to investigate a claim fairly promptly. If your insurance provider has taken an unreasonably long time to process or pay your claim, it may be an example of bad faith.

For example, the insurance company may switch adjusters on you after you have already been waiting for weeks to hear back. This resets their timeline and requires more time, even though there may not have been a real reason to switch the adjuster. The delay gives them more time to investigate and find
ways to reduce what is paid out.

Insurance companies may simply not get back to you. There are plenty of reasons for a delay that could be presented to you, but insurance adjusters do not work alone. They tend to work side-by-side with dozens of other adjusters who can fill in if there is a need for a new adjuster. Do not be fooled by long-term delays.

2. Inadequate Investigation

When you file an insurance claim, your provider has a duty to conduct an adequate investigation. There are some instances in which an insurance company may act in bad faith when processing a claim, such as closing a file early, not thoroughly investigating the details of a claim or even over-investigating to the point of intrusion.

If you are filing a claim for losses in a car accident due to medical injuries, you may have lined up medical reports and detailed records. Yet, the insurance company never asks for them. You report the claim, you hear nothing, and then, one day, you receive a denial because there is no evidence to support your medical claims. They did not ask for it, but you failed to send it.

If they did not have much time to investigate the case or you had yet to provide them with information (and you were still within the due date of that request), they may deny your claim in bad faith.

3. Negligence

If someone files suit against you, you might expect your insurance company to provide a defense on your behalf. Sometimes, though, insurers will neglect to provide an appropriate defense. Some companies will neglect to provide a defense at all. If an insurance company is neglectful in hiring adequate counsel for its clients, it may be acting in bad faith.

The insurance company may even tell you that you need to pay for the legal counsel in a situation like this. They may state they are choosing not to defend you and just pay out, too.

4. Refusing to Pay a Valid Claim

You submit all of the information about the injury and losses you have, and, for some reason, the insurance company just outright denies it. They are hoping you will not do anything else and just move on.

Insurance companies have the right to deny a claim if it is not a covered type of service. If you are filing a claim because you went to a chiropractor after a car accident caused back pain, that may be expected. In other situations, the insurance company may deny your claim, stating you do not have coverage. Disputes over coverage you clearly have are a type of bad-faith insurance
claim.

5. Requiring an Independent Medical Report

It is fully legal for an insurance company to want a third-party medical doctor to review the claims you are making, but before you go to them, ensure they are truly an independent doctor. If they are being paid by the insurance company to “quickly scan through your records” or even to find areas where they can try to pinpoint pre-existing conditions, that is an act in bad faith.

The doctor is not going to tell you that they are working for the insurance company. Yet, if they are inexperienced, or the go-to for the insurance company, you should be skeptical about their actions.

Options Against Bad Faith Insurance Claims

Perhaps you recognize your own scenario in one of these three examples. If you feel that your insurance provider has acted in bad faith, you still have legal options. A bad faith insurance attorney may help you receive compensation for your initial damages as well as the insurance company’s acts of bad faith against you.