Signs Your Insurance Company Is Acting in Bad Faith

Insurance bad faith describes an insurance company that violates or otherwise fails to uphold its own policies. This often results in an already distressed policyholder not receiving the payouts they deserve. However, when a policyholder can identify signs of an insurance company acting in bad faith, they equip themselves to seek legal representation and pursue the compensation they deserve.

What is Insurance Bad Faith?

Insurance companies must provide coverage for their policyholders. The policyholder has an expectation that their insurance provider will uphold the policy and provide payouts when appropriate. When an insurance company acts in good faith, they honor these policies and provide the agreed-upon coverage in a timely manner.

An insurance provider acts in bad faith when they attempt to twist the language of the policy or otherwise create delays to avoid providing coverage. For example, most insurance adjusters must investigate property damages in person. If he or she suddenly becomes difficult to reach, they might open themselves to an accusation of bad faith.

Bad faith practices constitute a failure to investigate, an unreasonable interpretation of the policy, an unreasonable settlement offer, and refusal to provide representation, among other examples. Any policyholder who believes their insurance provider meets these criteria might want to speak with an experienced property insurance attorney.

Why Does the Party Matter?

The basis of a bad faith claim might differ depending on the insurance provider. First-party insurance and third-party insurance operate differently.

First-Party Insurance

First-party insurers have a duty to investigate incidents (usually building damage in property insurance dispute) and pay claims. If a first-party insurer fails to meet their duties in a timely manner, they might be acting in bad faith.

Third-Party Insurance

Third-party insurers have an obligation to pay defense costs in a lawsuit, even if those costs exceed the amount of policy coverage. Third-party deals in liability insurance and judgments, meaning they also have to cover court decisions, such as a fine.

If a third-party insurer refuses to cover expenses exceeding coverage, they might be acting in bad faith. If an insurer ever flatly refuses to pay, consult an attorney immediately.

What are the Signs of Bad Faith?

· Insurance Adjustor Reschedules Multiple Times or Stops Responding

Life gets in the way sometimes, but an insurance adjuster who reschedules multiple property damage inspections might be acting in bad faith. If an insurance adjuster reschedules more than once, consider contacting an attorney. If they stop answer calls and emails altogether, speak to an attorney as soon as possible.

· Insurance Adjuster Seems to Misinterpret the Policy

Insurance policies are legal paperwork and can be difficult to understand. However, if an insurance adjuster seems to twist the language of the policy to avoid making a settlement, consider that an enormous warning sign of bad faith practices. If an adjuster makes an unreasonable interpretation of the coverage policy, speak to an attorney as soon as possible. Legal arguments are best left to the professionals.

· Insurance Adjuster Delays Payout

Insurance payouts typically take two months to process, though it varies between companies. If payout hasn’t come several weeks after the expected timeframe, it could be a sign of bad faith. It could even mean the adjuster never started the payout process. While there are other explanations, such as a mistake or a delay with the bank, it could be worth investigating. If the adjuster was cooperative until the mention of payout and suddenly became difficult to reach, you should consult an attorney.

· Insurance Adjuster Does Not Provide the Full Payout

A skilled insurance adjuster understands the value of property damage and loss of valuables. An extremely low payout or one that utilizes a tiny fraction of the total coverage could be a sign of the insurance company acting in bad faith.

If an insurance adjuster offers a payout and later reduces that amount, consult an experienced property insurance attorney as soon as possible.

Why Speak to an Attorney?

Insurance policies are written in the legal language. Anyone planning to contest an insurance company’s interpretation of their own policies must have a strong understanding of the law. Moreover, insurance companies have their own lawyers to dispute bad faith claims. Insurance bad faith is often difficult to prove, but an attorney can help.

An attorney can collect all of the evidence to ensure the insurance companies honor their policies and provide policyholders with the payouts they deserve. An experienced property insurance attorney understands the value of damages and will fight for higher compensation.

Bad faith claims are often difficult to prove. However, they come with the potential for a much larger settlement. Many states, including Florida, have passed laws that incur harsh punishments on any insurer engaging in bad faith practices. This can include several times the original policy amount, penalties and fines, interest on the amount owed, inflation adjustment, full coverage of attorney fees, and punitive damages.

What Are Punitive Damages?

Victims of insurance bad faith may have an opportunity to file for emotional damages. If bad faith practices cause a policyholder sufficient emotional distress or loss of their property, they can file a damages claim.

These claims are quite slow, but they often result in several times the amount of the insurance claim. A denied $500,000 insurance policy could become tens of millions of dollars in emotional damages. This serves as an incentive for insurance companies to maintain good faith practices, yet some insurance adjusters still risk litigation to avoid payouts.

If you believe your insurance adjuster acted in bad faith, you might have a case. If you’d like an experienced Florida property insurance attorney from Strems Law Firm to evaluate your claim, please send us an email or call (786) 661-3111.

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