Insurance Bad Faith: What to Do When Your Insurance Policy Doesn’t Hold

Insurance Bad Faith: What to Do When Your Insurance Policy Doesn’t Hold

Jun 20

There’s no way to predict when an accident will happen, nor is there a way to know the exact consequences that such an incident could lead to. The only way people can mitigate the risks they face is by being well-prepared for the possibility of accidents and natural disasters. It’s extremely important to set up safety nets so that damages and injuries can be properly covered and addressed. One such safety net is setting up an insurance policy, which allows an individual the means to prepare for financial losses caused by any catastrophic event.

Unfortunately, having an insurance policy doesn’t always guarantee financial security. Even with individuals that opt to pay more to receive higher benefits, there are some insurance providers that fail to hold up on their end of the agreement. In an act of bad faith, certain insurance providers grant payments that are much smaller than the policy that has been purchased. There have also been instances when insurance providers flat out refuse to act on legitimate claims, by denying the petition or even impeding its processing through malicious and questionable practices.

According to the lawyers at Smith Kendall, PLLC,  insurance bad faith is both a violation of legal statutes and the implicit trust that policyholders place on their providers. It happens because these questionable insurance providers are mostly concerned about avoiding liability, and are much more willing to protect their own interests than that of their clients. Such thinking is incredibly alarming, considering that these companies are in the business of ensuring that individuals won’t have to suffer more that they should. Common types of bad faith practices include false advertising, exaggerating or misrepresenting the coverage of a given insurance policy, and committing insurance code violations like delaying investigations of claims made.