Bad faith insurance claims, 6 bad faith tactics used by insurers, Very important term in insurance contract law, Failing to investigate fully, Excessive paperwork demands, Misrepresenting an insurance policy


From Black’s Law Dictionary.

“Six Bad Faith Tactics Used by Insurers

Written and Fact Checked by The Law Dictionary Staff


It is not unusual to have a disagreement with your insurer about how much your claim is worth. However, what is unacceptable is if your insurer denies or delays your claim by acting in bad faith. Bad faith is a very important term in contract law, especially when concerning insurance claims. Simply put, an insurer is supposed to act in good faith when investigating your claim. By acting in bad faith, that insurer may deny your claim for illegitimate or spurious reasons. Bad faith is not the same as negligence or simply making an honest mistake; rather, it happens when the insurer intentionally takes actions or fails to take actions so as to avoid paying out on a claim. Here are six of the most common bad faith tactics some insurers use.

  1. Failing to investigate fully

An insurer may have grounds to deny a claim, but if that insurer does not investigate the claim completely then it is acting in bad faith. A complete investigation ensures that a person’s claim is given the attention it deserves and that the insurer is taking the facts of the case into account when deciding on that claim. If the insurer comes to its decision suspiciously fast or gives reasons for its rejection that seem to have little to do with your claim then these may be indications that the insurer has failed to carry out a thorough investigation. In some rare cases, the insurer may flat out tell you that it will not investigate the case or it may simply not respond to your claim at all. While such blatant bad faith tactics are rare, they can be incredibly frustrating to deal with when they happen.

  1. Excessive paperwork demands

While some insurers may fail to make a full investigation, it can feel as though other insurers are overly zealous about their investigatory techniques. If an insurer is making constant demands for more information and more paperwork what is happening may not be a case of the insurer simply being thorough, but rather trying to drag the investigation on for as long as possible so as to delay deciding upon the claim. Of course, some claims will require a substantial amount of paperwork, but be careful about insurers simply demanding excessive paperwork. They may be trying to delay, look for a spurious reason for denying your claim, or hope that you’ll become so exhausted by the process that you’ll just give up.

  1. Misrepresenting an insurance policy

Insurers know that you probably haven’t read the fine print of your policy in too much detail and an unscrupulous insurer will use your lack of knowledge in that regard to its unethical advantage. An insurer that misrepresents the terms of your policy or misrepresents the facts of your case is engaging in bad faith. In many cases, the insurer is simply hoping that the claimant will take the insurer’s word on the policy for granted, which, sadly, many claimants do. You should take to a lawyer if your insurer is making a claim about your insurance policy that you disagree with or don’t remember agreeing to.”

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