Midwives Advantage


How to Spot a “Bad Faith” Insurance Company

Individuals invest substantial amounts of money over a long period of time in exchange for safeguarding their valuable assets.

An insurance policy is actually a binding contract between two parties: the insurer (the insurance company) and the insured (or the policy holder). Both sides are required to act in good faith and have the following rights:

  • The insured persons have the right to be treated fairly.

  • The insurer has the right to deny a policy holder’s claim in case they don’t respect the terms of the contract, or if the claim is fraudulent.

By purchasing any type of insurance policy the policy holder gains the right to receive full benefits of the policy in case of a covered claim.

Insurance companies sometimes act in “bad faith" in order to increase their profits by not paying on claims to policyholders as they have to. “Bad faith" refers to an attempt at illegal gain on behalf of the insurer at the expense of the insured.

When it comes to insurance coverage, if the insurance company refuses to pay or delays the payment, you may have a “bad faith" insurance claim.

Here are the most common “bad faith" insurer indicators that may indicate you need to contact a lawyer

  • The insurer delays, discounts or denies payment without any reasonable basis.
  • Upon notification of a covered claim, the insurer fails to acknowledge and reply promptly.
  • The insurer denies payment for a condition that is covered by the policy.
  • The insurer offers less than the amount stated in the policy.
  • The insurer’s representatives have threatened they would cancel your policy if you don’t settle for the low amount they’re offering.
  • The content of your policy has been altered without your knowledge.
  • Asking for over burdensome documentation that is not required by the policy.
  • The insurer conducts a biased investigation of the claim.

The key facts you have to remember when dealing with a “bad faith" insurance claim are:

  • Ask your lawyer about the statute of limitations (the timeframe in which you’re entitled to claim your right to compensation). This differs from state to state and once it expired, you have lost your chance to sue the company.
  • Write a detailed letter to your insurance company if they denied your claim and you don’t agree with their decision. Explain the circumstances and use policy quotes in order to prove you’re entitled to receive the coverage.
  • If their answer arrives and it’s not satisfactory, contact an insurance lawyer immediately and proceed with your legal claim.