What you need to know to battle bad faith insurance denials
“You were in an accident. Nobody was hurt. But they’ll still be pain.” This familiar refrain from the latest Nationwide auto insurance commercial is all too common to many drivers who have had their insurance claims denied. While some claims, such as full car replacement, are specific to certain policies and may not cover every driver, auto insurance companies are required by law to honor the policy you do pay for. But it’s probably no surprise that insurance companies save money by denying claims. This does not mean they are always dishonest, but it does mean that when in doubt they will deny your claim. An investigation conducted by CNN confirmed that insurance companies are taking a hardline in denying claims, and sometimes that line gets crossed into bad faith practices. In fact, a former Allstate and State Farm employee, Jim Mathis, admitted to CNN that insurance companies routinely rely on the “three D’s” – denying a claim, delaying settlement, and defending against a claim in court. “The profits are good, and as long as the community, the public allows this to occur, the insurance companies will get richer and people will not get a fair and reasonable settlement,” said Mathis.
When you file an insurance claim with an insurance company, by law, that company owes you a duty to act in good faith. Simply put, this means that the insurance company must not look for ways to escape its obligation to investigate the claim or to pay you. Doing so would constitute “bad faith” and claims or lawsuits based on bad faith may stem from one or more of a number of actions, or inactions, by the insurance company from denial of coverage to failure to negotiate a fair settlement.
If the stated reason your insurance claim was denied does not reflect the actual facts of your claim, or does not reflect your coverage, you have a right to dispute the decision. If the insurance company fails to appropriately process your claim, you may have reason to believe they acted in bad faith.
Beware of these common bad faith insurance tactics to help keep your rights protected:
- Your claim is denied without giving a reason. If you made a valid claim after a car accident and it was denied for no reason or an incorrect reason that may be bad faith.
- Failure to conduct an adequate investigation of the insurance claim. Insurance companies are required to conduct prompt and through investigations involving car accidents. Delayed or incomplete investigations leading to a denial may be bad faith.
- Unreasonable delay in processing payment. Even if your insurer agreed to pay your claim, unnecessarily delayed payments may be evidence of bad faith tactics.
- Attempts to settle your claim at a substantially lower amount. Insurance company efforts to “low-ball” your settlement and give you far less than the claim is worth.
- Misrepresenting the law or policy coverage. By law, insurers must be honest and truthful in their statements about the law and the policies involved in your claim.
- Refusing to provide documentation. Insurance companies are expected to comply with documentation requests from policyholders. Refusal to supply documents related to your claim is a red flag.
If you believe an insurer acted in bad faith, you may be entitled to compensation. Contact an experienced Colorado bad faith lawyer who can review your case and help you recover the insurance benefits owed to you.