How Can I Tell if My Insurance Company Is Acting in Bad Faith?

Bad Faith Insurance

When you file an insurance claim, your insurance company may drag their feet. If they do that or act in other questionable ways, they may be acting in bad faith. Bad faith occurs when an insurance company acts in a way that violates its duty to their policyholders. Insurance companies must treat people fairly and in good faith. 

Insurance companies are in the business of making money, so they do not want to pay out the full value of your claim. This can leave you on the hook for certain expenses that should be covered by your carrier.

Denying Claim Without Reason

If your insurance claim is denied, the insurance company must provide you with a reason. The reason must also be in writing. If they do not do this, they could be attempting to conceal information and acting in bad faith.

Delaying Payment of Approved Claim

If your claim has been approved, the insurance company must pay out your claim based on the terms of your policy or your agreement. If they are taking too long to pay your claim, they could be acting in bad faith.

Delaying Investigation

Once you file a claim with the insurance company, they are required to conduct a thorough and prompt investigation. If you are in a car accident for example, evidence can go missing very quickly, so time is of the essence. If the insurance company takes too long to investigate, they may not be able to determine the exact cause of the accident. 

Offering Lowball Settlement

Insurance companies will often offer lowball settlements to try and make claimants go away for as little money as possible. If you have thousands of dollars in covered injuries but the insurance company only offers you a few hundred, they could be acting in bad faith by offering an unreasonably low settlement.

Lack of Communication

When you file a claim, your insurance company must communicate with you. They do not have to speak with you every day, but they must keep you updated on their progress. If an insurance company representative ignores your requests for updates or takes an unreasonably long time to respond to you, they may be acting in bad faith. 

Lying to You

Some insurance companies may lie to you about the law and about your policy. They may say that your policy does not cover the injuries you have suffered. They may even try to alter your policy. No matter what, if the insurance company lies to you about the law or about what is covered, they could be acting in bad faith.

Requesting Unreasonable Proof

All insurance companies will require evidence of your injuries when you submit your claim. This usually involves police accident reports or doctor notes about your injuries. These are reasonable requests. Sometimes, however, an insurance company will try to bog you down by asking for unreasonable documentation or something totally unrelated to your claim. If you cannot provide what they ask for, they deny your claim in bad faith.

What Should I Do if I Suspect My Insurance Company Is Acting in Bad Faith?

If you have filed an insurance claim but have been treated in a way that makes you think the carrier may be acting in bad faith, you have some options. Speaking with a lawyer can help you determine which of these options is best for your situation:

  • Appeal: In your policy document will be instructions on how to appeal a decision. You need to follow this process, which usually includes a strict time constraint. Once you file your appeal, the insurance company has limited time to review and respond. They will let you know of their decision, but without a lawyer working to help bolster your case, you are likely to lose on appeal.
  • Sue: Even if you win your appeal, you always have the right to sue the insurance company. Due to their bad faith actions, you likely incurred additional damages. You can try to collect compensation from the insurance company to cover these expenses through a lawsuit. You may be able to collect compensation for medical expenses, lost income, and household costs.

Under New Jersey law, you have six years to file a bad faith lawsuit against your insurance company. However, your insurance policy may have a more limited time, so it is crucial that you review your policy to make sure that you are filing a lawsuit before the deadline. 

What Do I Have to Prove?

To prove bad faith, you must meet a high bar. You need to prove that the insurance company acted in bad faith by denying your claim, withholding benefits, or any other unreasonable act that had no validity. Unfortunately, this leaves much room for insurance companies. If you claim that the insurance company did not do a full investigation of your car accident, that may not be enough to prove bad faith. The insurance company does not need to prove that they conducted a full and complete investigation, just simply that they did an investigation.

If your claim was denied outright, you need to prove that the insurance company had no legitimate reason to deny your claim. If you claim that the insurance company unreasonably delayed payment to you, you will need to prove that the insurance company had no valid reason for delaying the payment. These are extremely high bars for you to meet. 

Warren Insurance Lawyers at Herold Law Can Help You if You Suspect Your Insurance Company Is Acting in Bad Faith

When you need your insurance company to support you, you expect them to be there. Sometimes, insurance companies act in bad faith, but you may have legal options. Speak with one of our Warren insurance lawyers at Herold Law, P.A. for help today. Call us at 908-679-5011 or complete our online form to schedule an initial consultation. We are located in Warren, New Jersey, and we proudly serve clients throughout the surrounding areas, including Plainfield.