[…] you lost a loved one in a tragic car accident? Contact a dedicated Denver wrongful death attorney today to discuss your […]
Types of Bad Faith Insurance | Denver Insurance Dispute AttorneyWhen consumers purchase an insurance policy, they expect to be protected after an accident or catastrophe. However, this is not always the case. If your insurance company does not fully compensate you for claims to which you are entitled, you may be a victim of bad faith insurance practices. Contact a Denver insurance dispute attorney for help. Insurance companies are in business to make money. Therefore, providers instruct their adjusters on methods of minimizing payouts to claimants. Adjusters are often instructed to refuse compensation and employ delay tactics to hinder the claims process. They are encouraged to confuse clients with legal jargon or purposely offer a settlement far below the true value of the claim. Insurance companies have a duty of good faith practices to their customers. These include, a timely investigation of the claim, and open and ongoing communication concerning the claim. Furthermore, prompt payment or a prompt denial of the claim with a reasonable explanation –in writing- is part of that duty. When an insurance provider fails in these duties, they may be guilty of acting in bad faith. Some types of bad faith insurance practices include:
- Delaying payments
- Refusing to return phone calls
- Denying claims
- Not paying claims timely
- Ordering unnecessary tests
- Losing paperwork
- They will deliberately act in bad faith. Because insurance companies only make money when they don’t have to pay out claims, the top-grossing firms routinely deny legitimate claims, or settle for far less than the actual value of the claim. In fact, over the last ten years, by denying and under-paying claims, insurance companies have collectively enjoyed profits that average over $30 billion a year.
- They will underpay on claims. Providers commonly underpay insurance losses by failing to inspect or survey all of the damage. They also classify functional damage as cosmetic, calculate repair costs inaccurately, and interpret the policy in their favor.
- They will grossly delay payment for a claim. Some insurance claims are complex and require extensive analysis of the cause of the damage. Others do not because the damage can be easily calculated. Extensive delays in the latter scenario may reach the threshold of breaching the contract and result in bad faith.
- They deny legitimate claims. Insurance companies have a duty to settle legitimate claims for the policy limits or face potential legal exposure.
- They will cancel an insurance plan completely for an illegitimate reason. Insurance companies can only cancel your policy for a legitimate reason, for instance, lack of payment. They are required by law to notify you in writing, however, before doing so.