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How to Know If an Insurance Company Has Acted in Bad Faith

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Posted on September 20, 2023

We’ve all seen the compassionate ads for insurance companies promising to be there for us in our time of need, protecting our property and providing coverage for medical care after an accident or injury. Sadly, insurance companies exist to make profits and often prioritize their financial bottom lines over paying out on legitimate claims.

Most San Diego car accident victims file insurance claims with the expectation that the insurance company will live up to their promises and follow the terms of their signed contracts. If an insurance adjuster wrongly denies your valid claim and fails to live up to the terms of the contract, they’ve acted in bad faith. Fortunately, like many states, California allows victims of bad-faith insurance practices to file lawsuits against insurance companies that act in bad faith and fail to pay out on a legitimate claim according to the terms of their contract.

Some Insurance Company Tactics are Underhanded, but Not Bad Faith Practices

If you’ve been in a car accident, experienced a terrible fall, were injured by a defective product, or became the victim of medical malpractice, you may have serious financial damages plus a claim for pain and suffering. Insurance companies rarely write out large checks happily, and they may try some of the following common tactics to undervalue your claim or deny it completely:

  • Calling within days of the incident to offer a low settlement in exchange for signing away your right to file a lawsuit, often before you know the true amount of your damages
  • Recording phone conversations and using your remarks against you out of context to deny your claim
  • Claiming that their medical professionals state that your doctor’s recommended treatment is not necessary for your injury
  • Looking for a pre-existing condition in your history and claiming it as the true cause of your pain
  • “Catching” you on social media in an activity that makes it appear your injury isn’t as bad as you’ve claimed

While these tactics may seem sly and underhanded, they aren’t examples of bad faith practices. Instead, they are legitimate tactics that an astute attorney can easily recognize and protect a client against.

What are Bad Faith Insurance Practices?

Insurance companies sometimes go so far in their attempts to deny a claim that their methods exceed the legal boundaries and become actionable bad faith practices—meaning they cross the line into violating the terms of their contract. An insurance company commits bad faith practices with any of the following actions:

  • Blatantly breaching the terms of the insurance contract
  • Denying a legitimate claim without reason or for an invalid reason
  • Causing unreasonable delays on the investigation and/or payout in the hopes that you’ll accept a lower settlement out of frustration
  • Offering a settlement amount that’s far lower than the value of your damages
  • Failing to pay on an approved claim for an extended period of time
  • Blocking communication and not returning calls or emails
  • Forcing the injury victim to undergo unnecessary or repeated medical tests
  • Failing to approve payment to your health insurance company for medical treatment you’ve undergone

When an insurance company does not follow through on the legal obligations of their contract with a client, they’ve committed bad faith practices. A successful lawsuit against the insurance company for acting in bad faith could result not only in compensation for your original damages but also an extra amount of compensation for the emotional stress caused by their unreasonable delays and denials of your claim. In cases of egregious bad-faith policies—such as harassing or threatening claimants—the court could also award punitive damages, an amount paid to you by the insurance company to serve as a punishment and deterrent of future repeats of the behavior.