Can insurance companies refuse to respond to pending claims?

On Behalf of | Feb 4, 2025 | Bad Faith Insurance

Most people view homeowners insurance coverage as a requirement rather than as a form of protection. They don’t anticipate ever needing to file a claim. They carry a policy because their mortgage lender requires it.

Many property owners are fortunate to avoid any significant issues that make a large claim necessary. However, inclement weather can strike with little warning. People can also sustain significant property damage due to criminal activity. In such scenarios, property owners generally expect to make a straightforward insurance claim to cover their living expenses and repair costs.

Sometimes, insurance companies are cooperative and respond promptly to pending claims. Other times, insurance companies leave policyholders in limbo for weeks, wondering how they can cover their expenses. Can insurance professionals ignore or delay claims indefinitely?

Failing to respond is a bad faith practice

Both state and federal laws impose certain requirements on insurance companies. They typically have an obligation to uphold their policies in good faith. That means providing appropriate compensation based on the terms negotiated for the policy.

The law also requires a timely response and resolution to insurance claims. Generally speaking, the insurance company must respond quickly to a pending claim. The company should at least acknowledge the claim within 10 working days of the policyholder communicating with the company.

The company may respond by providing specialized forms for the policyholder, such as proof of loss documents. Once the policyholder has submitted the necessary paperwork, the company should begin reviewing the claim.

Policyholders usually receive a response approving or denying a claim within 15 days. The company may also indicate an intent to investigate the claim. Typically, the company must communicate in writing about the need for an extended investigation.

If insurance companies ignore claims or fail to notify policyholders in writing about the need to investigate matters more thoroughly, policyholders may have reason to suspect that the company has acted in bad faith. Reviewing the claim thus far with an attorney can help homeowners determine if the insurance company may have violated the law.

Pursuing a bad faith insurance lawsuit may result in the payment of the claim as well as penalties for the insurance company who violated state statutes. Homeowners dealing with significant delays and other claims complications may need help holding their insurance company accountable.