Insurance companies don’t always tell the truth. Despite what their advertisements and representatives may claim, insurance companies are in the business of making money. As a result, paying out claims following an accident is not always their top priority.
When you or a loved one suffers injuries in a car accident, you might expect the at-fault party’s insurance company to pay your claim and cover the cost of your recovery. Unfortunately, many of these firms may deceitfully try to lower the amount they pay you, choosing instead to benefit their bottom line.
As a victim of a terrible accident, you may think that the insurance company’s settlement offer, however low it may be, is your only option.
When someone else’s negligence has hurt you, you have a legal right to compensation that allows you to rebuild your life. To help you recognize when an insurance company is working against you, we’ve compiled a list of common bad faith tactics insurance companies use to deny policyholders their rightful claims.
Bad Faith Insurance Practices
Before we address these tactics, we must first define “bad faith.”
What Is A Bad Faith Insurance Claim?
An insurance company acts in bad faith when they deceitfully avoid their contractual obligations to policyholders or third parties. If you choose to take legal action against a deceitful insurance company, you can make a bad faith insurance claim.
Each policy sold by an insurance company is a contract. In exchange for monthly or annual premiums, the insurance company pays out money to a victim if certain situations occur. For example, if you get into a car accident caused by another driver, the other driver’s insurance provider would have to pay you under the terms of their insured’s liability policy.
This business model assumes that most policyholders will not be involved in accidents because insurance companies lose money every time they pay out on a claim. The fewer claims they pay, the more money these companies save. Therefore, corrupt insurance companies will strategize to make claimants—victims like you—go away.
Recognizing Bad Faith Insurance Practices
If you ever get involved in a car accident, you’ll need to be able to recognize these deceitful insurance tactics. Don’t get cheated out of the recovery you deserve. Here are nine of the most common bad faith tactics our firm has seen insurance companies make.
1. Denying a Claim Without a Reason
In most instances, insurance companies must provide a reason for denying a claim. Unfortunately, this doesn’t always happen. Some unscrupulous insurance companies have internal policies of denying all claims upon submission, regardless of their validity. Their hope is that the claimant will go away and not appeal.
2. Delaying a Decision
Other times insurance companies might take their time deciding on your claim. This can be detrimental to your health because your medical care may depend on the approval of your claim. If the insurance company delays, your medical care may also be delayed. Bad faith may be the cause of this lag.
3. Making a Lowball Offer
An insurance company “lowballs” you when they attempt to settle your case by offering you far less money than what your case is worth. Insurance companies might do this even if they recognize your claim as valid.
This bargaining tactic is extremely deceptive. Many victims assume they have to accept the first offer an insurance company gives, even if it is lower than expected. This is never a good idea. When someone does accept, the offer is final—victims can’t negotiate a higher settlement once they’ve taken a low one.
Insurance companies may train their adjusters to take advantage of victims by offering lowball settlements to claimants who are not represented by an attorney. Don’t be deceived—call a personal injury lawyer the moment you suspect bad faith.
4. Refusing to Pay a Valid Claim
When you submit your claim to the insurance company, they will require documentation and evidence to support your claim. If you provide all of this information and they still deny your claim, the insurance company may be acting in bad faith.
On the other hand, if you don’t provide all of the information requested, they may deny your claim outright instead of asking you to correct your mistake. This could be a bad faith tactic, too—one you can quickly correct by partnering with an attorney.
5. Failing to Conduct a Prompt Investigation
When an insurance company gets notice of an accident, it must thoroughly investigate the incident within a reasonable time frame. In other words, it can’t simply send an agent to the accident scene to snap a quick picture and leave. The insurance company must investigate to determine the cause of the accident. If it fails to do so, it may be acting in bad faith.
6. Making Threatening Statements
After an accident, a victim may already be stressed and anxious. Threatening statements from an insurance adjuster add to this mounting anxiety. The insurance adjuster may tell you that you were really at fault for the accident or that you don’t deserve compensation for your injuries. These statements are obviously indecent, but they could also be bad faith—a stressed and anxious victim is unlikely to demand a higher settlement offer.
7. Refusing to Provide You with Documentation
Insurance companies must respond to reasonable requests for documentation that support their claims-related decisions. However, not all insurance companies are willing to comply. Whether they’re hiding something or simply employing poor business practices, refusing to respond to a reasonable request for documentation of a claims decision could be a bad faith insurance tactic.
8. Delaying Payment
Even if your claim is approved, the insurance company may be slow to get your payment to you. Insurance companies must make a payment within a reasonable period after they determine your claim is valid. While the length of “reasonable time” could be up for debate, if you haven’t received a check within one month of your claim being approved, you should suspect bad faith.
9. Misrepresenting the Law or the Facts of Your Case
An insurance adjuster may lie to you and tell you that:
- “Your injuries aren’t that severe.”
- “You need to settle today.”
- “We are accepting liability.”
- “You must give us a recorded statement; you don’t have a choice.”
- “You must sign this release form, and you cannot have a lawyer review it.”
- “You don’t need to hire a lawyer.”
That last one is perhaps the most egregious lie we’ve heard insurance adjusters tell personal injury victims. Hiring a lawyer with experience in the insurance world may be the best thing you can do for your chances of maximizing recovery. They know this, too—that’s why they try to get you to settle without representation. Hiring an experienced personal injury attorney after your car accident can mean the difference between a return to quasi-normalcy and financial peril.
Who Can Bring a Bad Faith Claim Against an Insurance Company?
Unfortunately, insurance companies can act in bad faith toward both car accident victims and drivers at fault. For this reason, both parties may be able to bring a bad faith claim against an insurance company.
What Is A First-Party Bad Faith Claim?
When an insured makes a claim for payment from his or her own insurance policy, that is called a “first-party” insurance claim. When an insurer uses bad faith tactics against their insured’s claim for policy benefits, the policyholder may have a first-party bad faith claim against their insurer.
Here are some examples of situations where you might have a first-party bad faith claim.
- Another driver totals your car in a hit and run, and your insurance company refuses to cover your damages under your collision insurance.
- Your car is stolen, and your insurance company unreasonably delays paying out the claim you make under your comprehensive coverage.
- Your house suffers a loss from water damage and your insurance company refuses to pay for the repairs.
In all three examples, your own insurance company is responsible for paying you. If your insurer acts in bad faith, you may have a first-party bad faith claim against them.
What Is A Third-Party Bad Faith Claim?
When you file a claim with another person’s insurance company because their actions caused your injury, you would be filing a “third-party” insurance claim. You are the third party, and the person that hurt you is the insured. Third-party bad faith claims occur when an insurance company refuses or delays in compensating the third party for an accident caused by their insured.
For example: let’s say you were seriously hurt in a T-bone accident, and you hire a law firm to recover compensation from the at-fault driver. The at-fault driver’s insurance company refuses to settle and you file a lawsuit. The case then goes to trial where you are awarded a verdict that far exceeds that at-fault driver’s policy limit.
In this instance, the insurance company’s refusal to settle exposed the at-fault driver to financial ruin, as he is now personally responsible to pay the amount of the verdict in excess of the policy limits. He (the insured) may have a bad faith claim against his insurance company for failing to settle the claim against him within his policy limits. If the insurance company acted in bad faith, it will be liable to pay the entire amount of the verdict, including the amount in excess of the policy limits. The insured can then use this claim to force the insurance company to pay the total amount of your verdict.
Combat Bad Faith Tactics with PARRIS Law Firm’s Help
Bad faith tactics by insurance companies are flat-out wrong. Whether insurance adjusters deny your claim, delay your payment, or outright lie to you, you may have a legal claim against the insurance company for bad faith.
If an insurance company’s bad faith tactics are egregiously malicious, fraudulent, or oppressive, the victim might even be able to recover punitive damages from the insurance company.
Contact PARRIS today to defend yourself against these tactics. We have the skill, resources, and inside knowledge to defend you against insurance companies and secure the compensation you deserve.