When you choose an insurance company, you enter an agreement that they will cover you when it’s appropriate – i.e., for a legitimate claim. This is why you pay your monthly premiums. When they fail to do this, it’s called ‘bad faith’ insurance, and it’s illegal.
Unfortunately it’s something insurance companies do far too often. In the insurance industry, the bottom line is money. It’s a $30 billion annual industry, with trillions in assets. This is how they make their profit. The more claims denied, the greater the profit for the company.
It’s in their ultimate interest to find ways to not pay these claims.
There have been infamous examples of this in the past. One of the worst was when Hurricane Katrina hit. The insurance companies used an obscure ‘flood exemption’ clause—despite policyholders having ‘hurricane coverage’—that left families homeless and uncovered. Farmers Insurance had a program called ‘Quest For Gold’ – wherein they incentivized their adjusters with pizza parties and gift cards if they were able to meet low payment goals.
Common Bad Faith Insurance Practices
Insurance companies have many other ways they act in ‘bad faith’, and it’s often thought to be legal by the victim. Here’s what they do:
- Offer an unreasonably low amount of payment to settle a claim
- Deny a claim with little to no explanation
- Delay payment on the claim (with elderly policyholders, it’s common to delay payment consistently until the person dies)
- Advise their client against seeking legal help
- Investigate the claim to ‘build a case against’ their client
- Alter the policy term without notice
Fortunately for you, this is all illegal. Often the victim feels they are against impossible odds in filing a claim.
Insurance companies are notorious for using some of the most dense, obscurely-worded documents that, ironically, insure them against paying future claims.
The most unfortunate part is that, when you’ve been in an accident or part of a situation where you were the victim, you are in a vulnerable spot. Accidents and other situations are often accompanied with trauma, and the last thing you need is the insurance company to build a case against you. When you are subjected to bad faith insurance, you need to speak with a lawyer. Call Roger Davidheiser today to discuss your options.
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