Updated on March 16th, 2019
Buying an insurance policy is one of the most important undertakings that people owning assets should consider. An insurance cover shields you against total losses when an accident or any other unforeseen occurrence occurs leading to total destruction of an asset. Pending legal cases and formal processes, it is expected that an insurance company will compensate the policyholder if an insured accident or occurrence is filed by the policyholder.
However, a significant number of insurance companies have been reported to have failed to honor their deals, which has led to a negative perception towards insurance companies and the industry as a whole. The Federal Insurance Office (FIO), which is the insurance regulatory authority in the United States requires that policyholders report any incidences of breach of contract by insurance companies.
Some insurance companies have already been accused of a structured and deliberate strategy to act in bad faith after failing to disclose all details of a particular insurance policy. This means that a significant number of policyholders are already disadvantaged.
According to the Law Office of Matthew L. Sharp, insurance laws compel insurance companies and their agencies to treat policyholders with the expected fair dealing and good faith. Any insurance company that fails to adhere to these laws can be held answerable to insurance of bad faith.
Here are the critical factors that will help you to determine whether your insurance company is answerable to insurance bad faith.
1. Reducing The Amount Of Claim
When agreeing on the insurance policy that will insure particular assets, all the prices and the amount to be claimed are disclosed and written on the agreement form. Some insurance companies pay claims with regard to the current book value while others consider the current book value and the associated incomes that would have been generated if the asset was not damaged.
Insurance bad faith is likely to occur when the insurance company reduces the amount of claim. Some insurance companies fail to pay claims depending on the book value and only pay depending on their assessments. You can contact an insurance lawyer to litigate this matter and enforce the company to pay the agreed claims.
2. Wrongful Denial Of Payments
For one to be paid the agreed claims by the insurance companies, he must follow a standard procedure that involves reporting the accident, conducting the necessary analysis by the insurance companies, and then the final stage of releasing claim payments. It is at the analysis stage that everything starts going downhill.
Most of the insurance companies have been accused of denying policyholders due payments wrongfully. Insurance companies, through their accident experts, tend to give all manner of excuses with the sole intention of denying payments. Wrongful denial of insurance claims amounts to insurance of bad faith.
3. Unjustified Claim Payment Denial
This might appear to be similar to the wrongful denial of payment of claims. However, it is a different aspect as it addresses insurance laws that require insurance companies to justify why a particular incident will not be indemnified. Apparently, a significant number of insurance companies have failed to pay insurance claims without giving a justified reason.
Some insurance companies have gone to the extent of accusing policyholders as frauds, who have been claiming insurance payments without justification. If you find that your insurance company has denied your claims without a justifiable reason, you need to consult your attorney as this amounts to insurance bad faith.
4. Delay Of Payments
Some insurance companies take time before they can complete their claim verification process, which is compounded by even a longer period before claims are settled. This might put you into financial difficulty, and unless you resolve the issue quickly, you might find yourself finding it hard to meet your financial obligations.
It is unfortunate that most of the insurance companies concentrate on maximizing financial gain at the detriment of their customers. Therefore, you should always sue for financial compensation if your insurance company fails to act in good faith and fair dealing.