If your Florida home undergoes significant damage in a hurricane, flood or any other type of adverse incident, you rely on your homeowners’ insurance company to help cover the cost of damages. After all, that is what you pay the company to do. Unfortunately, insurance companies do not always hold up their end of the deal, and they sometimes act in bad faith when dealing with homeowners’ claims. Knowing when your insurance company acts in bad faith can help you avoid the headache and monetary loss associated with a delayed or unfair settlement.
Insurance bad faith refers to the use of dishonest or unfair practices by an insurance company when dealing with a policyholder’s claim. Bad faith can take many forms, but some are more common than others. FindLaw explains common bad faith tactics and how you can identify them.
One of the most common ways insurance companies commit bad faith is by putting off making a decision regarding a policyholder’s claim. Insurance companies do this in the hopes that the policyholder will give up on the claim after waiting for so long. For this reason, many states have laws that specify by when an insurance company must respond with a decision. The deadline is typically between 15 and 60 days of receiving the claim.
Another common bad faith tactic is offering less money than the claim is worth. Unfortunately, many homeowners do not argue with their carriers’ offers, assuming their carriers act only in policyholders’ best interests. This is not the case. In fact, many providers try to lowball policyholders to bolster their own profits. It is also not uncommon for providers to flat out refuse to pay a valid claim.
Another bad faith tactic is misrepresenting the law or policy language. Because both can be complex and convoluted, providers often attempt to convince claimants that they are in the wrong.
Many insurance companies also fail to conduct a complete investigation. Part of a provider’s duty is to promptly and thoroughly investigate the circumstances surrounding an incident. If a provider fails to do either, it has, essentially, breached its duty.
Some insurers may act more boldly in their deceit by failing to divulge the existence of coverage, failing to notify a policyholder of a claim filing deadline or using threatening language. Each of these acts are acts of bad faith.
The content in this article is for learning purposes only. You should not use it as legal advice.