10 Ways Insurers Act in Bad Faith
If you’ve submitted a claim for insurance benefits and have had those benefits denied, undervalued, or delayed (or have perhaps had the insurer refuse to step in and defend you against third-party litigation), then you may be entitled to challenge the insurer’s decision under Florida law.
In some cases, the insurer has violated its obligations to you — the policyholder — to such an extent that it qualifies as bad faith misconduct. Bad faith claims can give rise to independent compensation, and even bonus punitive damages. Punitive damages are available if the insurance company’s bad faith was willful, malicious, or reckless. Therefore, If you believe that your insurer has acted in bad faith, it’s worth exploring your legal options.
Here at Ver Ploeg & Marino, P.A., we encourage you to contact an experienced Miami bad faith insurance attorney at our firm to schedule a consultation.
For now, let’s explore some ways in which insurers act in bad faith.
#1 INSURER HAD NO REASONABLE BASIS FOR THEIR DENIAL
Insurers may not be held liable for bad faith if they simply made a mistake. As such, the mere fact that they “denied” your claim is not justification for a bad faith lawsuit. Instead, you will have to show that they had no reasonable basis for denying your claim.
This can be a bit of a challenge.
For example, an insurer who denies your claim on the basis that you did not submit sufficient evidence may have reasonably denied it, even if your claim is legitimate — once you provide the additional evidence, however, if they deny it then they may not have a reasonable basis for doing so.
Whether the insurer denied your claim “reasonably” is a fact-based question that will be evaluated by the court.
#2 INSURER UNREASONABLY DELAYED THE PROCESSING OF THE CLAIM
Insurers must not unreasonably delay the processing of your claim (or subsequent communications regarding your claim). If you submit a question regarding required documentation/records to your insurer and they do not provide a prompt reply (for example, they delay sending a response for three months), then that could very well constitute a bad faith act justifying a lawsuit.
In many insurance contracts, there are specific provisions holding the insurer to certain deadlines for the claim processing. It’s important to go over these provisions with your attorney so that you can hold the insurer to their own contract terms.
#3 INSURANCE AGENT MISREPRESENTED CONTRACT TERMS
If the insurance agent misrepresented the terms (i.e., specific terms, policy limits, exclusions, etc.) when you entered into the contract, then you will have an actionable bad faith claim against the insurer. Insurers must not misrepresent the contract so as to induce you into signing onto the policy.
For example, suppose that you sign onto a homeowners’ insurance policy in which flooding is excluded from coverage. When you were discussing exclusions with the insurance agent, however, they told you that flooding is not excluded from coverage. This misrepresentation would qualify as a bad faith act.
#4 INSURER REFUSED TO DEFEND DESPITE CLEAR COVERAGE
Depending on the insurance coverage, your insurer may have a duty to defend you in related litigation. A liability insurer, for example, may have to step in to defend your business if a customer sues the business in a personal injury lawsuit.
Unfortunately, many insurers will attempt to avoid their responsibilities under the insurance contract and avoid defending you in litigation. Though in some cases there may be legitimate ambiguity in the insurance contract (concerning coverage), in cases where the contract is unambiguous as to its terms, the insurer’s refusal to step in and defend you in litigation could lead to a bad faith claim.
#5 INSURER DID NOT FULLY INVESTIGATE THE CLAIM
Insurers must fully investigate claims. They must engage the resources necessary (human, technological, etc.) to do so.
For example, if you’re being sued by a third-party and your liability insurer fails to fully investigate the claim, this could expose you to significant potential liability and extend litigation unnecessarily — under such circumstances, a bad faith claim against your insurer may be justified.
#6 INSURER FAILED TO NOTIFY POLICYHOLDER OF REQUIRED INFORMATION
Insurers have a duty to notify policyholders of required information, records, and data that they will need to fully process the claim at-issue. Failure to notify policyholders of the required information could be construed as bad faith — particularly as it tends to create confusion and lead to a policyholder’s legitimate claims being left unaddressed by the insurer.
Insurers have an incentive to avoid disclosing this information to policyholders, so it’s important to evaluate whether your insurer has disclosed everything that you’ll need. If your claim has been denied on the basis of you having minimal supportive evidence, but the insurer did not notify you as to what they would have required to fully investigate and process your claim, then they could ostensibly have acted in bad faith.
#7 INSURER WAS A POOR COMMUNICATOR
One tell-tell sign that an insurer is acting in bad faith is when they fail to communicate with the insured. Insurance companies should, in good faith, respond to all forms of communication in a timely manner. This includes replying to correspondence, emails, and phone calls. It can also mean a failure to acknowledge the receipt of communication sent to them or a failure to update you as to the progress of your claim.
Insurers should also maintain an open line of communication with their insureds, and when they fail to do so, a Miami bad insurance attorney can help by investigating your case. If they find that the insurer has acted in bad faith, they can then guide you through the process of making a bad faith claim.
#8 INSURER CONDUCTED MULTIPLE INSPECTIONS
Insurers will, and should, conduct an investigation of the property for which you are making a claim. If they have a genuine concern and verifiable reason, they may have to conduct more than one inspection. However, when they begin to insist on multiple inspections by numerous people without a well-founded reason, it can be a sign that they are acting in bad faith and using the multiple inspections as an excuse to delay paying the claim. If you are unsure as to whether or not your insurer is using this tactic to delay paying your claim, speak with a Miami bad insurance attorney at VPM.
#9 INSURER PRESSURED THE INSURED TO ACCEPT A LOW OFFER
Typically speaking, insurers try to settle claims for as little money as possible as quickly as possible. While you obviously want to resolve the issue with expediency, do not rush to take the first offer from the insurer. Also, be wary if the insurer pressures you to accept an offer that you suspect is too low for the damages sustained. The insurer may be hopeful that you will take the money quickly before you realize that you should be receiving more for your claim.
Be careful when the insurer is pressuring you to accept an offer and contact a Miami bad insurance attorney to find out the options you have in this situation.
#10 UNREASONABLE DEMANDS
It is not unreasonable for the insurance company to request different types of documentation and evidence from you in relation to your claim for damages. However, when the demands seem to be endless, and the requests are for documentation that does not seem to be related to the actual claim for damages, the insurance company may be acting in bad faith. The insurance company should be able to provide a reason as to why they are requesting the documentation from you, and when they cannot, it is a good idea to contact a Miami bad insurance attorney at VPM to learn about the options available to you.
CONTACT A MIAMI BAD FAITH INSURANCE ATTORNEY AT VER PLOEG & MARINO, P.A. FOR LEGAL ASSISTANCE
Ver Ploeg & Marino, P.A. is an insurance litigation firm based out of Miami, FL, with decades of experience representing policyholders in a wide range of insurance disputes. We help policyholders navigate the challenges of securing compensation in a complicated insurance scenario — and, where an insurer has engaged in misconduct (or otherwise unjustified behavior), are committed to pursuing bad faith claims on behalf of our clients.
Effective advocacy requires trial readiness.
We have a deep bench of litigators who are willing and able to push through to trial — this gives us leverage in negotiating a resolution with insurers at an early stage of litigation. Oftentimes, we can use this leverage to secure a favorable resolution and avoid a lengthy dispute.
Contact us via our website or call (305) 577-3996 if you’d like to speak to an experienced Miami bad faith insurance attorney at VPM. We look forward to speaking with you.
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