When you file an insurance claim after an accident, you expect the insurance company to handle it fairly. Unfortunately, some insurers prioritize profits over policyholders and engage in bad faith insurance practices to avoid paying legitimate claims. Knowing how to recognize these tactics and what to do if you are a victim can help you fight back and secure the compensation you deserve.
What Are Bad Faith Insurance Practices?
Bad faith occurs when an insurance company unreasonably delays, denies, or undervalues a valid claim without a legitimate reason. In California, insurers are legally required to act in good faith and deal fairly with policyholders. When they fail to do so, they may be held accountable under bad faith insurance laws.
Examples of Bad Faith Insurance Practices
1. Unreasonable Claim Denials
An insurer may deny a claim without proper justification, often using vague explanations or citing policy exclusions that do not apply.
2. Delaying the Investigation or Payment
Insurance companies sometimes stall investigations or delay payouts, hoping policyholders will give up or accept a lower settlement.
3. Offering an Unreasonably Low Settlement
Some insurers undervalue claims, offering settlements that do not cover medical expenses, property damage, or lost wages.
4. Misrepresenting Policy Terms
An insurer may mislead policyholders about coverage, exclusions, or claim filing deadlines to avoid paying a claim.
5. Failing to Properly Investigate a Claim
Insurance companies are required to conduct a thorough and timely investigation. If they ignore key evidence or rush to deny a claim, they may be acting in bad faith.
6. Refusing to Communicate
Failure to return calls, ignoring emails, or not providing claim updates can be a sign that an insurer is acting unfairly.
7. Using Pressure Tactics
Some insurers pressure claimants into accepting lowball offers by falsely claiming it is their only option or that they must accept quickly.
What to Do If an Insurance Company Is Acting in Bad Faith
1. Document Everything
Keep records of all communications, including emails, phone calls, and letters. Save copies of medical bills, accident reports, and any settlement offers.
2. Request a Written Explanation
If your claim is denied, request a detailed written explanation outlining the reason. This can help you determine if the denial was valid or in bad faith.
3. File an Appeal
If your claim was unfairly denied or undervalued, you can appeal the decision. Submitting additional evidence, such as medical records or repair estimates, can strengthen your case.
4. File a Complaint with the California Department of Insurance
If you believe the insurance company is violating state laws, you can file a complaint with the California Department of Insurance (CDI). They can investigate and take action against bad faith practices.
5. Consult a Bad Faith Insurance Attorney
An experienced attorney can:
- Evaluate whether the insurer acted in bad faith
- Negotiate a fair settlement on your behalf
- File a lawsuit if necessary to hold the insurance company accountable
What Compensation Can You Recover in a Bad Faith Insurance Claim?
If an insurer is found guilty of bad faith, you may be entitled to compensation beyond the original claim, including:
- The full value of your original claim
- Additional damages for emotional distress
- Attorney fees and legal costs
- Punitive damages if the insurer’s actions were particularly egregious
Do Not Let an Insurance Company Take Advantage of You
Insurance companies are supposed to provide fair coverage, not unfair denials and delays. If you suspect bad faith insurance practices, the Law Offices of Brent W. Caldwell can help. Contact us today for a free consultation and protect your right to fair compensation.
