When you purchase insurance protection, you have certain expectations. One of those is that in the event of a disaster, your insurance company covers your losses as agreed. After all, you purchase insurance for all of life’s “just in case” situations.
Suppose you’ve researched and found a policy that suits your need, and you pay your policy premiums. What happens when you need to use your insurance to cover damages, and they don’t pay?
Insurance bad faith
arises when an insurance company intentionally doesn’t uphold its legal obligations.
Intentional actions by insurance companies
You might think that you’re covered as long as you pay your policy. In most cases, that’s true, but bad-faith insurance issues arise so often that laws against bad-faith actions now exist to protect policyholders from this practice. Bad faith can take many forms, but a couple of common issues are:
- Misrepresentation: Insurance jargon is technical and difficult for the layperson to understand. Either through intentionally confusing contract language or by failing to disclose policy limitations upfront, an insurance company acts in bad faith when they manipulate the language or insurance coverage to the policyholder.
- Intentional Delays: Oftentimes, an insurance company launches an investigation once a claim is filed. The bad-faith occurs when the company intentionally drags the whole process out or encroaches upon unreasonable demands of proof on the policyholder. These intentional delays cause major out-of-pocket expenses.
Not all denied insurance claims are the result of an insurance bad-faith issue. Still, the technicality of the insurance industry may make it difficult to recognize when these tactics are employed. If you’re worried your insurance company isn’t upholding its end of the deal,
learning more about bad-faith insurance
laws may help protect your legal rights.
