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What Does Bad Faith Mean in Insurance?

What Does Bad Faith Mean in Insurance?

When you sign up and pay premiums for a homeowner’s insurance policy, you expect your insurance company to follow all the rules and regulations properly. In the insurance business, bad faith means that the insurer did not uphold the agreement through intentional dishonesty and misdirection. In other words, when the insurance company has no intention to honor their agreement in a fair, just, or legal manner, they are operating in bad faith.

Examples of Bad Faith in Action 

To the average person who is not involved in the insurance industry, it can be difficult to determine when a bad faith action occurs. If you have any concerns, contact an experienced property damage attorney to help figure things out. This is especially important if you notice any warning signs.

Immediate and Unjustified Claim Denial 

If you file a property damage claim, and it’s immediately denied, it may be a sign of bad faith practices. Insurance companies need time to look over all the details of a claim and make a fair determination. Denying too quickly without proper oversight may be an intentional stalling tactic that shows they do not intend to pay you what you deserve.

Confusing Insurance Policy Terms and Fine Print 

Every homeowner’s policy involves paperwork and contracts you must agree to and sign. These hold you, the property owner, and the insurance company to a set of rules that must be followed. Do not sign anything without fully understanding it first. When you read over your policy, make sure you understand all of its limitations and exclusions. If you have questions or are confused by the language, ask for clarification in writing before you sign.

If you didn’t read all the fine print in your policy first and later file a property damage claim, an attorney can help determine whether purposeful misrepresentation of the rules is cause for a bad- faith claim. This may make it possible to overcome a claim denial or increase the settlement amount to cover the cost of repairs to your damaged property.

Excessive Demands for Proof of Coverage 

After the damage occurs, an insurance company needs proof of what happened and how it affected your home or other residential buildings. However, if the policy provider insists on excessive documentation, inspection, or other proof, it may constitute an unreasonable and unfair demand. This is another way an insurer can operate in bad faith. When you pay your bill and premiums, you expect to get a claim settlement promptly. If you don’t, seek legal help to fight for your rights and recover from the property damage situation.

General Evasion and Delays 

Unfortunately, many homeowner’s insurance plan providers will delay payouts for as long as possible so they can hold on to your money. This doesn’t necessarily mean they’re operating in bad faith. However, wasting time, evading your questions, or making the claim seem more complex than it is are all clues that something’s not right. An experienced property claim attorney can keep the pressure on and ensure the claims process moves in the right direction.

Learn more about your rights and set up an initial consultation appointment with a lawyer at Louis Law Group by calling (954) 676-4179 or filling out the contact form on our website. Let us help you make sense of your property damage and insurance claim situation.

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