What To Do If Your Insurance Company Acts In 'Bad Faith'

Daren Brown
By Daren Brown | March 19, 2019

claimsYou likely spend thousands every year on insurance coverage. For that outlay, you expect the insurance company to do its part if something bad happens. The reality can be a bit different. Insurance companies are for-profit businesses. They will do what they can to minimize the amount they pay on insurance claims. In a few cases, they go as far as acting in "bad faith."

What Is ‘Bad Faith?’

When a client purchases an insurance policy from an insurance company, both parties are entering into a contract. Both parties have certain obligations under the contract. The policyholder must pay for the insurance and only make legitimate claims. The insurance company must investigate claims in a timely manner, pay a reasonable amount for a claim, and pay claims promptly.

Most people associate the term "insurance fraud" with a policyholder who files a false claim to try and get money from the insurance company. In reality, "insurance fraud" can go both ways. If an insurance company fails to take appropriate action to settle a claim, they are committing "insurance fraud" against the policyholder. When insurance companies fail to meet their legal obligations, they are acting in "bad faith." And the claimant can take action to get them to meet those obligations.

How To Handle An Insurance Company Who Is Acting In Bad Faith

If you think your insurance company is failing to do its part in getting your claim resolved, there are a few things you can do:

  • File a complaint with the insurance company's complaint department. Sometimes, a formal complaint can get an insurer to start moving on investigating and paying a claim. Plus, it shows evidence that the claimant has tried to get the insurance company to do its job.

  • Contact your state's department of insurance. Most of these departments have a consumer complaint division. You will need to file a formal complaint that outlines the details of what happened and what the insurance company has done (or not done) to resolve the claim. Many insurance companies do not want to deal with formal state complaints and will start moving quickly to find resolution.

  • Hire an attorney. If you find that nothing is getting the insurance company to do its part, it is time to seek the help of the courts. In a number of cases, a simple letter from the attorney to the insurance company can spark resolution. In some cases, though, you may have to go to court to get resolution.

If your insurance company is failing to investigate or pay your claim, contact the insurance experts here at Stockard, Johnston, Brown & Netardus, P.C. in Amarillo, Texas. Download a package of informational articles on first party insurance claims.

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Topics: First Party Insurance Claims