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Common Types of Bad Faith Insurance Practices

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Those who carry insurance would like to believe their carrier is on their side; unfortunately, that is not always the case. Sometimes the efforts of insurance companies to save money go too far and they fail to provide customers with what is entitled to them under the terms of the contract. Both parties, like with most contracts, are expected to treat one another fairly and in good faith.

If an insurance carrier fails to fully compensate its policyholders promptly whenever it is appropriate, it is acting in bad faith. Victims of bad faith insurers should work with a Miami personal injury attorney to put a stop to this unfair and illegal treatment, and get what they’re owed. Below are common failures by insurance companies that trigger bad faith lawsuits.

Failure to Pay

The most common type of bad faith involves insurance companies failing to make proper payments toward legitimate claims made by their policyholders. A bad faith insurer may unreasonably delay, discount, or deny payment for claims clearly covered by the policy. Insurance companies acting in bad faith can also try to offer less compensation than what is due by settling a claim for considerably less than its true value. Some companies withhold payments by not entering any kind of settlement negotiation or simply not investigating the claim. This form of bad faith is one of the easiest to prove, provided you work with a local Miami personal injury attorney.

Failure to Conduct Investigation

When an insurance carrier receives a claim, it is supposed to investigate it in order to prove liability, that is, to prove it is legitimate. Claimants must provide the necessary information to their insurers, so the allegations in the claim can be adequately checked. Insurers act in bad faith if they withhold or deny coverage or compensation because of a failure to conduct a formal and punctual investigation of the claim. Unethical insurers might try to unduly extend the investigation process by requesting excessive documentation from the claimants and/or physicians and some might deny a claim if that paperwork is not produced. If the paperwork they are requesting was not explicitly listed in the policy, the request can constitute bad faith.

Failure to Communicate

Insurance companies are legally obligated to provide policyholders with timely, relevant, and accurate communication. Additionally, carriers must fully disclose policy limits to customers. When an insurer receives a claim, it is expected to quickly respond to it. Bad faith is when it takes the company many weeks or even months to either validate and pay or deny a customer’s claim. When the insurer does not provide a reasonable explanation for its denial of a claim within a reasonable amount of time, that constitutes bad faith as well.

The laws affecting bad faith claims vary by state. If you live in Florida and are a victim of bad faith practices by your insurance company, it is best to consult with your local Miami personal injury attorney. To find out how our attorneys can help you claim what you are actually owed, call Graham Legal today.

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