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Most Common Insurance Bad Faith Claims

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Posted on March 8, 2023

Insurance companies use neighborly tones and down-home appeal to advertise their policies, but the bottom line for a private insurance company is profit. An insurance company’s business model ultimately relies on taking in a greater amount in premiums than they pay out in claims. To this end, insurance companies hire adjusters whose job description includes finding ways to minimize payouts or deny claims outright. While they generally rely on legal loopholes, and underhanded tactics, in some cases, an insurance company’s methods rise to an actionable level through an insurance company bad faith claim.

Tactics Insurance Companies Frequently Use to Minimize Payouts

Not all of an insurance company’s tactics rise to the legal level of a bad faith claim but if you’ve been in an accident you should be wary of the following common tactics used by insurance adjusters to minimize a payout on your claim:

  • Calling you within days of an accident with a lowball settlement offer before you could begin to understand the scope of your damages, such as the cost of medical treatment for your injuries and the number of paychecks you’ll lose during recovery
  • Asking for medical authorization to review the record of your injuries and then scouring your medical history for “evidence” that your pain is related to a pre-existing condition
  • Recording phone calls and using your words out of context so a simple, “I’m fine, how are you,” ends up sounding like an admission that you aren’t really injured
  • Claiming that the medical treatment or equipment your doctor recommended isn’t  necessary for your type of injury
  • Using your posts on social media against you
  • Assigning you a higher percentage of fault in the accident than you’re responsible for in order to reduce the percentage they have to pay out on your claim

In most cases, the best way to handle these tactics is to direct all communication with an insurance company to your attorney. Insurance companies understand that a seasoned attorney recognizes underhanded actions and stands ready to counteract them on your behalf.

When Do Insurance Company Tactics Constitute Bad Faith?

If an insurance company does not live up to the terms of the policy agreement they have with an insurance policyholder, they can be held liable in a bad faith insurance claim. Every time they have to pay out on a claim they lose money. For this reason, insurance companies sometimes act in bad faith to maximize their profits. 

Some examples of actionable bad-faith insurance company actions include:

  • Delaying an investigation and delaying the payout on your claim for an unreasonable amount of time.  This can negatively impact your healthcare if you’re unable to pay for medical bills
  • Misrepresenting policy terms and provisions in order to deny a claim
  • Denying a valid claim without cause
  • Altering the terms of the policy without informing the policyholder
  • Undervaluing a claim below the deductible so they don’t have to pay out at all
  • Refusing to respond to requests for information or documentation
  • Making unreasonably low settlement offers to compel courtroom litigation in the hopes that the claimant won’t follow through with a time-consuming lawsuit
  • Making threatening statements

When an insurance company’s action rise to this level, the person denied benefits can make a bad-faith insurance claim against them and receive compensation for damages. Large, profitable insurance companies count on victims not understanding the tactics a company uses or being unaware of their own rights and the insurance company’s obligations. By choosing representation by an experienced bad-faith insurance attorney, you can avoid bad-faith insurance behaviors or counteract them with a lawsuit to recover damages, plus legal fees and punitive damages if the company committed fraud or caused delayed medical care.