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When can policyholders fight bad-faith insurance efforts?

On Behalf of | Nov 7, 2023 | Bad Faith Insurance

Navigating the aftermath of an accident, property damage or other loss is a stressful time for anyone. It’s a period when the terms of a comprehensive insurance policy should provide a safety net. Unfortunately, there are instances when policyholders must confront the unsettling reality of an insurance company acting in bad faith. 

Bad faith insurance practices refer to any insurer’s attempt to circumvent its obligations to policyholders. This could manifest as unjustified delays in handling claims, failure to conduct a proper investigation, refusal to pay a claim without a reasonable basis or not fully compensating covered losses. Understanding when and how to fight back against such practices is crucial for better ensuring that you receive the compensation you’re rightfully owed.

Recognizing the signs of trouble

The signs of bad faith efforts can be subtle, such as requests for unnecessary paperwork or repetitive queries designed to delay processing your claim. More overt signs include denying a claim without a clear explanation, a sudden change in your policy’s terms without notice or an attempt to settle for less than the claim’s worth.

It’s important to know that policyholders are protected by law against bad faith insurance practices. Most jurisdictions have statutes and legal precedents that set the standards for insurance companies’ conduct towards their clients. When an insurer steps outside these bounds, a policyholder has the right to challenge them legally.

Insurance companies are expected to act in good faith and deal with policyholders fairly. When they fail to do so, policyholders can seek legal guidance to better understand their rights and options under the law.