Good insurance can sometimes seem like an oxymoron. Insurance, by its very definition, is protection. When you buy insurance, it’s to protect yourself from loss, whether it’s related to your car, your home, your belongings, or your business. Should anything happen to the items listed on your insurance policy, you expect the insurance company to pay for the loss according to the agreement laid out in that policy. It may not even occur to you that the insurance company might refuse to pay a valid claim. The sad fact is that despite having what sounds like an ironclad contract with an insurer, you’re really taking it on faith that they’ll pay you if and when the need arises. Insurance companies that refuse to fulfill policy terms are said to be acting on bad faith.
While you may not have experienced bad faith insurance issues first hand, you might have heard about it happening in the wake of natural disasters. After Hurricane Ivan destroyed property in Florida in 2004, several policyholders filed claims with their insurer, Citizens Property Insurance Corporation. Unbelievably, Citizens tried to avoid paying those claims. They based their refusal on the fact that the company was created by the state of Florida. According to Citizens, they should enjoy the same immunity from liability given to other government entities in similar situations. A bad faith insurance trial is now pending.
Similar situations arose in Louisiana after Hurricane Katrina. The difference was that rather than state-specific insurance companies refusing claims, it was large, well known, nationwide companies like State Farm. The rationale, at least in one case, was a tiny clause in a homeowner’s insurance policy. The policy covered wind damage, so the homeowner thought she would at least receive payment for the damages caused to her home by the hurricane-force winds. She was shocked when State Farm refused to pay, citing that little clause which stated that if the home was damaged by an earthquake, flood, or other disaster not covered by the policy, the wind damage portion of the policy became null and void.
The point is, if you pay for insurance, you expect it to pay you when you need it. You expect your insurance company to come through and live up to their end of the bargain. When an insurance company acts on bad faith, you must take action to protect yourself, and recover the losses you have suffered. Don’t let an insurance company take advantage of you. If you file a valid claim and your insurance company refuses to pay it, let Bachus & Schanker help you get what you’re entitled to.