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Can a low settlement be bad faith insurance?

On Behalf of | Jan 8, 2022 | Bad Faith Insurance

You count on the insurance company to help you pay your bills after a car crash. The other driver’s policy can help cover your hospital bills and weeks of income because you can’t work. They can also help you repair your vehicle or replace it if the insurance company declares it a total loss.

Sometimes, claims involve submitting individual bills one at a time. Other times, the insurance company will offer a lump-sum settlement to resolve the matter and absolve themselves of future liability. If you accepted a settlement that has since proven to be far too low, could you hold the insurance company accountable for bad faith insurance practices?

Low settlements are a potential way to avoid responsibility

Insurance companies won’t necessarily pay for all of your losses. They will only pay as much as the maximum amount of coverage carried by the driver who caused the wreck. However, sometimes, they will settle a claim for far less than the available amount of insurance coverage.

The company may estimate the total costs and then offer someone half of that amount so that they have room to negotiate. If someone accepts that low settlement, the insurance company wins. If they negotiate, the insurance company starts such negotiations from a reasonable but still lower rate. Not covering the full costs of a crash and leaving someone with massive bills could be a form of bad faith insurance, especially if the company knew what they offered was far from enough.

Going over the records from your crash and the documentation from the settlement can help you determine if you may have a claim for bad faith insurance.